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journals and records of the checks cashed at the Money Exchange.
Petitioners argue that the sales journal was inaccurate and
disorganized because jobs that were contracted for in one year
may have been completed and paid for in the next year.3 The
record does not reflect whether the amounts purportedly received
in 1995 were included in the amount of income petitioners
stipulated they received in 1995.
Respondent calculates petitioners underreported 1994 income
as follows: Gross sales of $1,125,319.84 as reported in HRDC’s
sales journal, plus three accepted bids not listed totaling
$12,825, plus extras of $45,060.50 performed by Mr. Payne, for
total gross sales of $1,183,205.34 ($215,039.34 more than was
reported on HRDC’s 1994 return). HRDC’s journals are a part of
the record. The sales journal, which respondent used to
reconstruct HRDC’s income for 1994, very clearly and legibly
lists the amounts charged for each job HRDC performed in 1994.
The accounts receivable journal, which petitioners claim more
clearly reflects HRDC’s income, by contrast, is disorganized,
illegible in places, and, according to Mrs. Payne’s testimony,
incomplete. Petitioners did not clarify the entries in the
accounts receivable journal. Petitioners have not attempted to
3This argument leads us to conclude that HRDC used the cash
method of accounting for tax purposes for 1993, 1994, and 1995.
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