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the SMR partner responsible for petitioners’ and Cedar Hill’s
accounts.
SMR supplied petitioners with forms for the purpose of
recording cash transactions in Cedar Hill’s operations. These
forms were titled “Daily Sales and Cash Report” and were referred
to as “pink sheets”. The pink sheets provided a means of
recording different categories of cash receipts and disbursements
so that petitioners and SMR could account for Cedar Hill’s cash.
The cash disbursement categories included a line denoted
“Personal Drawing” for recording cash withdrawn by Mr. Parsons
for personal use. The pink sheets also had a line for recording
the amount of cash deposited into Cedar Hill’s bank account. Mr.
Parsons understood the “Personal Drawing” line to be a place for
recording money taken out of the register during the course of
the day for personal use.
At the end of each business day, Mr. Parsons brought home
the register tapes, cash, and receipts from the cash registers at
Cedar Hill and gave them to Mrs. Parsons, who then completed the
pink sheet record for that day. By comparing the cash and the
register tapes from each cash register and shift, it could be
determined whether each cashier was properly accounting for his
or her cash receipts. Each morning, Mr. Parsons would take the
cash that Mrs. Parsons had counted in preparing the pink sheets
the previous evening, so he could deposit it in Cedar Hill’s bank
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Last modified: May 25, 2011