You have been retained by the law firm of Thompson Associates. Thompson Associates have been retained...

Transcribed Image Text:

You have been retained by the law firm of Thompson Associates. Thompson Associates have been retained by Jones Manufacturing Company in a case involving a suspected kickback by a purchasing employee James Conroy. Conroy is suspected of accepting kickbacks from an employee of Harrison Sheet Metal Company. Conroy has denied the charges. Thompson Associates filed a civil action and subpoenaed Conroy's books and records, including bank statements. The following information for the year 2022 was obtained: Beginning bank balance January 1, 2022 Ending nk balance December 31, 2022 Gross salary $3,700 per month, with a net of $3,000 House payment $1,400 per month $3,400 $2,000 Car payment $2,441 per month on a new Cadillac Paid a total of $8,450 toward a new Maxima (including a $5,000 down payment). Paid $5,500 on AV equipment. Household living expenses (food etc.) estimated at $900 per month Required: Calculate the understatement of income for the year 2022 if any, using the Expenditure Method. Explain your conclusion in one or two sentences. You have been retained by the law firm of Thompson Associates. Thompson Associates have been retained by Jones Manufacturing Company in a case involving a suspected kickback by a purchasing employee James Conroy. Conroy is suspected of accepting kickbacks from an employee of Harrison Sheet Metal Company. Conroy has denied the charges. Thompson Associates filed a civil action and subpoenaed Conroy's books and records, including bank statements. The following information for the year 2022 was obtained: Beginning bank balance January 1, 2022 Ending nk balance December 31, 2022 Gross salary $3,700 per month, with a net of $3,000 House payment $1,400 per month $3,400 $2,000 Car payment $2,441 per month on a new Cadillac Paid a total of $8,450 toward a new Maxima (including a $5,000 down payment). Paid $5,500 on AV equipment. Household living expenses (food etc.) estimated at $900 per month Required: Calculate the understatement of income for the year 2022 if any, using the Expenditure Method. Explain your conclusion in one or two sentences.

Answer rating: 100% (QA)

To calculate the understatement of income for James Conroy in 2022 using the Expenditure M... View the full answer