Dak, Inc. - Page 5

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          include the years 1992 through 1996.  Upon completing her audit,            
          Ms. Groom submitted a comprehensive report to Dr. Shlens.                   
               Moonshadows has a dining room and a bar area.  During the              
          applicable period, Moonshadows utilized two cash registers that             
          recorded dining room sales (register 1) and bar sales (register             
               To conduct her audit, Ms. Groom used the cash register tapes           
          from registers 1 and 2 to determine petitioner’s gross sales for            
          the applicable period.  She compared daily sales reported on                
          sales journals, sales tax returns, financial statements, and                
          petitioner’s monthly reports that were given to Dr. Shlens.  Ms.            
          Groom also compared the cash register tapes with the daily dinner           
          and bar sales tickets.  She determined that Moonshadows had sales           
          in the dining area of $1,298,418 from June 1, 1994, through April           
          30, 1995, and sales in the bar area of $380,520, for the same               
          period.  Ms. Groom’s audit did not include the month of May 1995,           
          because petitioner’s records for that month were not available              
          for analysis.                                                               
               Ms. Groom also determined that for the period June 1, 1994,            
          through April 30, 1995, the register tapes reported “other voids”           
          and “voids and overrings” of $23,085 and $237,342, respectively.            
               In 1997, respondent commenced his audit of petitioner’s tax            
          year ended May 31, 1995.  At that time, representatives of                  
          petitioner informed respondent that petitioner’s sales records              

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