Please answer all parts :)

1. You are an accountant representing Harry Holesale, who operates a retail hardware store in your area. You have prepared Harry's most recent tax return, and Harry has now come to you because the most recent year and the two prior years' returns are scheduled for office examination. Harry asks you to represent him at the audit regarding all three years. In preparation for the audit appointment, you perform a preliminary Taccount on the most recent year. You are surprised to discover that the cash expenditures exceed sources of income by some $45,000. A close inspection of the return, which you prepared, discloses that the gross profit percentage reflected in the return is 15%. You have recently worked with other clients in the retail hardware business, and you know their gross profit percentage is generally closer to 35% to 37%. You then review Harry's two prior returns and find that the gross profit percentage was 14.8% and 15.3%, respectively. The preliminary T-account of these three years shows a potential understatement of over $100,000. Aside from any ethical considerations, what do you do in this situation? Consider the following alternatives: (A) Call Harry and grill him until he gives you a satisfactory explanation regarding the apparent understatement: (1) If Harry has a convincing explanation that the understatement was the result of an innocent error, do you prepare amended returns? Or is it better to go to the office examination appointment and not divulge the understatement until the auditor finds it? (2) If Harry admits that he was cheating on his returns, do you prepare amended returns in that situation? (B) Do not ask Harry for any explanation; rather, you prepare amended returns based on the T-account, insist that Harry sign them without review, and then file them with the examiner at the beginning of your appointment. You're hoping that your "voluntary disclosure" of the unreported income will deter the examiner from asking for any further explanation. (C) Without asking Harry for any explanation, strongly suggest that he seek competent legal advice and help him find a tax attorney. (D) Hire a tax attorney as your agent to interview Harry and get his explanation for the understatement, and then have the attorney report back to you with the results