- 3 - from the local refinery, and payments for all invoices are made by an automatic draft from petitioner’s checking account on the 10th day following any purchase. All invoices for the sale of products to customers by petitioner use a 10-day net collection period. Richard and Vivian Cross, who together own 100 percent of petitioner, incorporated the business from a sole proprietorship in 1978. Petitioner has maintained its books and records using the cash or hybrid method of accounting since its incorporation. Petitioner has reported its income for Federal tax purposes using the cash method of accounting. Petitioner’s financial information is summarized in the following charts. Petitioner’s ending inventory, gross sales, and percentages of ending inventory to gross sales are as follows: Percentage of Ending Gross Ending Inventory Year Ended Inventory Sales to Gross Sales June 30, 1996 $104,148 $2,119,386 4.91 June 30, 1997 96,513 2,590,025 3.73 Petitioner’s purchases, gross receipts, and percentages of purchases to gross receipts are as follows: Percentage of Purchases Gross to Gross Year Ended Purchases Receipts Receipts June 30, 1996 $1,765,594 $2,119,386 83 June 30, 1997 2,288,090 2,590,025 88Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011