Dennis C. Gandy - Page 10

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          "Dennis Gandy Nursery" (account No. 21-5232-0).  This latter                
          account was opened on December 29, 1988.  Thereafter, this new              
          account was used as the business account for the nursery.  All              
          references to the nursery bank account refer to the business bank           
          account in use as of the date discussed.                                    
               During the years in issue, the nursery had office procedures           
          that generally were followed by petitioners and nursery                     
          employees.  Various nursery office employees would assist the               
          walk-in customers and write up invoices.  The chain store                   
          invoices were generated from the computer.  Petitioners continued           
          to maintain the two sets of ledgers.  During 1985 through 1989,             
          petitioners maintained one set of ledgers to record receipts from           
          the nursery that generally were not deposited into the nursery              
          bank account.  That set consisted of the ledgers that listed the            
          handwritten or typed invoices; those ledgers were referred to by            
          the nursery employees as the cash book or cash ledger or the                
          walk-in book or walk-in ledger (the walk-in ledger).  Petitioners           
          maintained a second set of ledgers to record receipts from the              
          nursery that generally were deposited into the nursery bank                 
          account.  This second set of ledgers contained listings of the              
          computer-generated invoices; employees referred to these ledgers            
          as the deposits ledger or deposits book or the chain store book             
          or the chain store ledger (the chain store ledger).                         
               During 1985 through 1989, the nursery sales invoices were              
          marked with a "P" when they were first posted to the appropriate            



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