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C. Cash Hoard
Checks that Vortex received from Tri-State General and U.S.
Trading were deposited into the corporate checking account and
recorded in the Vortex general ledger. However, cash received
from Belkin and Edelson and Srebrianski was not deposited into
the corporate checking account or recorded in the Vortex general
ledger. Instead, Mrs. Zhadanov recorded the cash in a cash
receipts journal and later into a cash disbursement journal. The
cash receipts journal recorded cash received by Vortex in
connection with the plastic vial production totaling $728,346.
The cash disbursement journal recorded expenses and income
generated by the plastic vial production. With two exceptions,
the entries in the cash receipts journal and the summary of cash
income in the cash disbursement journal correspond exactly.
Mrs. Zhadanov put the cash from the sale of plastic vials in
shoe boxes she kept in a safe located at the Zhadanovs’
residence. Each shoe box had a tally slip on which Mrs. Zhadanov
kept a running total of the balance to indicate whether money was
added or removed from the shoe box. Sometimes, cash from one
shoe box was combined with another shoe box in an effort to save
space in the safe.
Vortex did not report the cash receipts on its income tax
returns, financial statements, general ledger, or a 1992
application for a $400,000 loan to buy equipment.
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Last modified: May 25, 2011