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deposit into Cedar Hill’s bank account.3 These withdrawals of
cash by Mr. Parsons were not noted as personal draws or otherwise
recorded on the pink sheets. As a result, the pink sheets
reflected the cash on hand at the end of each business day but
often did not reflect the subsequent cash withdrawals made by Mr.
Parsons before making deposits into Cedar Hill’s bank account.
The total cash withdrawn by Mr. Parsons but not recorded on the
pink sheets equaled $57,106 in 1987 and $35,957 in 1988. Some,
but not all, of this money was deposited into Mrs. Parsons’
personal bank account.
After the close of each month, Mr. Parsons forwarded that
month’s pink sheets to SMR. He also provided handwritten
summaries of that month’s sales and accounts receivable (the
white sheets). Using the pink sheets, the white sheets, and
other records of check transactions, SMR prepared monthly balance
sheets, income statements, and general ledger sheets for Cedar
Hill.
Mr. Skoda noticed that the amounts recorded for Cedar Hill’s
accounts receivable could not be reconciled with the cash in
Cedar Hill’s bank account, nor did the “Cash Deposited” amounts
Mrs. Parsons had recorded on the pink sheets match the actual
3 Often, Mr. Parsons would make such withdrawals at the
request of Mrs. Parsons, who would call him at Cedar Hill and
request that he deposit additional funds in her personal checking
account to cover checks she was writing.
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Last modified: May 25, 2011