Stuart and Betsy Bobry, et al. - Page 6

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            to 12 weeks the daily cash register tapes and the copies of the                             
            receipts reflecting Lyell Metal’s purchases of scrap metal.                                 
            Before the cash register tapes and the copies of the receipts                               
            were disposed of, Lyell Metal's accountant occasionally would                               
            spot check the accuracy of the receipts with the inventory                                  
            records that were maintained by Lyell Metal.                                                
                  Since October of 1991, Lyell Metal has retained the daily                             
            cash register tapes and copies of the receipts reflecting its                               
            purchases of scrap metal by cash.  Such receipts, however, do not                           
            reflect the identity of the customers from whom Lyell Metal                                 
            purchased scrap metal.                                                                      
                  During 1989 through 1992, certain inventory records were                              
            maintained by Lyell Metal and apparently reflect only the type                              
            and quantity of scrap metal that was purchased by check and by                              
            cash and the scrap metal that was part of Lyell Metal’s inventory                           
            at any one point in time.                                                                   
                  For 1989, 1990, and 1991, Lyell Metal’s cost-of-goods sold                            
            was computed based on the canceled checks (i.e., those checks                               
            made payable to specific payees to take into account scrap metal                            
            purchased by check and also the checks made payable each day to                             
            cash to take into account scrap metal purchased by cash).                                   
                  For 1992, Lyell Metal's cost-of-goods sold was computed                               
            based on the copies of the receipts of scrap metal purchased that                           
            were retained for that year, and also on the canceled checks.                               






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