Peoplefeeders, Inc. and Subsidiaries - Page 7




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                                             Peoplefeeders' Expenses                  
                    Peoplefeeders' Cash ReceiptsAnd Loan Payments Paid                   
          Taxable   Transferred Into IntercompanyOut Of Intercompany                      
          Year      Bank Account             Bank Account        Difference           
          1988           $  782,266               $1,449,289     $  667,023           
          1989           690,964                  1,454,344      763,380              
          1990           902,115                  1,530,067      627,952              
          1991           1,053,523                1,490,889      437,366              
          1992           927,586                  2,183,805      1,256,219            
          Total          $4,356,454               $8,108,394     $3,751,940           

          Books and Records                                                           
               The record herein does not adequately reflect how, at the              
          time cash sales receipts were received by the various                       
          restaurants, the cash receipts were recorded, if at all, on the             
          books and records of Peoplefeeders, of Square Pan, and of the               
          other related corporate entities.  The evidence does not indicate           
          that, at the time cash receipts were received by the restaurants,           
          debit entries were made to a cash bookkeeping account, nor that             
          credit entries were made to a sales account.                                
               The record, however, does establish that when cash receipts            
          were transferred from the separate bank accounts of the                     
          restaurants into the Intercompany bank account, entries were                
          made, apparently for the first time, in the books and records of            
          Peoplefeeders, of Square Pan, and of the other corporate                    
          subsidiaries.  Again, however, the parties’ briefs and the                  
          limited portions of petitioner's books and records that were                
          introduced into evidence herein are confusing, incomplete, and              
          unclear as to specifically how the transfers of cash into, and              
          the payment of expenses out of, the Intercompany bank account               




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