- 6 - the consigned merchandise, less $100,000 which had been sold, remained on hand. VIG, which prepared the financial statements for tax year ended June 30, 1991, inquired in July 1991 as to why the $2,031,778 of trade accounts payable had been eliminated from the books. Mr. Rosales represented that CPI's officers had assumed responsibility for the debt and that the amount was recorded as additional paid-in capital. VIG requested and received a letter2 signed by 2 The letter states: In connection with the audit of the financial statements of Cleo Perfumes, Inc., for the years ended June 30, 1990 and 1991, we have made available to you all information related to stockholder's equity. During 1991, the Company's stockholders assumed personally and subsequently capitalized as part of paid-in capital a note receivable from stockholder in the amount of $371,157, a trade accounts payable to an unaffiliated company in the amount of $2,031,778, and a note payable to bank in the amount of $200,000. The netting of these transactions increased paid-in capital by $1,860,621. The undersigned stockholders of Cleo Perfumes, Inc. hereby confirm to you that the afore-mentioned [sic] transactions were in due time properly and adequately approved by the Board of Directors and also that Mr. Oscar Campos, Sr., President of our (continued...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
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