- 17 -
Mr. Sutton did not document any funds that he contributed to
or that he withdrew from the corporate petitioner. There were no
promissory notes, repayments schedules, or other documentation of
any loans to or from him. Mr. Sutton did not tell Ms. Stroud
about any funds he contributed, other than to answer any specific
questions she asked him.
Ms. Stroud would post any deposits Mr. Sutton identified as
being from him, as well as any unexplained deposits, as a credit
to Account 135-Loan to Shareholder (Account 135). Nearly all of
the credits to Account 135 are marked as "deposits". Ms. Stroud
would also charge to Account 135 any personal items of the
Suttons paid by the corporate petitioner and any unexplained
shortages. The following yearend adjusting journal entries were
made charging Account 135 in order to reconcile cash on hand to
the actual cash balance:
TYE Amount
09-30-87 $89,930.05
09-30-88 49,872.72
09-30-89 3,730.00
09-30-90 18,717.41
The yearend adjustment for 1987 bears the notation "assumed went
to Malcolm Sutton since it did not go to Savings Acct."
The corporate petitioner's unaudited financial statements
for October 1, 1985, through September 30, 1989, do not mention
any liabilities owed to Mr. Sutton. To the contrary, these
financial statements show the following:
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011