- 7 -7
Purchases 667,606 668,260 622,769 728,371 763,995 729,929
Ending Inventory 131,250 88,014 131,250 131,250 54,785 131,250
1992 1993
original amended adjusted original adjusted
Gross Receipts $887,837 $1,125,400 $1,412,380 $1,308,700$1,750,539
Cost of Goods Sold 645,550 912,465 884,197 1,061,8581,088,859
Beginning Inventory 131,250 54,785 131,250 93,817 131,250
Purchases 645,550 951,497 884,197 1,122,6911,108,576
Ending Inventory 131,250 93,817 131.250 154,650 165,082
To determine gross receipts, Agent Brown first allocated cost of
goods sold between guns and other goods. He determined that each
beginning and ending inventory figure for 1990 through 1993
consisted of 28.2 percent guns and 71.8 percent other goods
(i.e., this allocation was consistent with petitioners' 1993
inventory records). He accepted as correct the purchase amounts
from Faw's work papers, used information received from vendors to
determine the amount of purchases attributable to gun purchases,
and subtracted gun purchases from total purchases to determine
the amount of purchases attributable to other goods. Agent Brown
did not have sufficient information to categorize the 1990 and
1991 purchases. After allocating cost of goods sold between guns
and other goods, Agent Brown applied the gross profit percentages
to determine gross receipts. For 1992 and 1993, he applied a
gross profit of 15 percent to the cost of guns (i.e., he
multiplied cost by 118 percent) and 40 percent to the cost of
other goods (i.e., he multiplied cost by 167 percent). He did
not have sufficient information to allocate between the cost of
guns and the cost of other goods sold in 1990 and 1991, so he
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