Richard Ross operates a flower shop downtown. Ross appears to be living beyond his means and is under investigation for tax fraud.

1.You have a financial statement signed by Ross and dated December 31, 20X1. The statement indicates Ross had $1,000 cash on hand. Cash on hand was zero at year end 20X2 and 20X3.

2.Ross has a checking with a balance of $4,000 on December 31, 20X1. His balance on December 31, 20X2, was $9,000, and on December 31, 20X3, was $2,000.

3.A search of the county real estate records shows that Ross purchased his home in 20X1 for $130,000 and that he obtained a mortgage on the house at that time. The mortgage balances are $98,000, $96,500, and $94,500 at year end 20X1, 20X2, and 20X3, respectively. The monthly mortgage payments are $1,000. Any amount that did not reduce the mortgage balance is interest expense.

4.Real estate taxes on the house are $1,500 per year.

5.Ross bought a new car in April 20X2. He paid $25,000 cash for the car.

6.City records show that Ross obtained a building permit for backyard swimming pool. The pool company indicated that Ross the pool project cost $20,000 and was completed in June 20X2. Ross made a $10,000 cash down payment and received an interest free loan from the pool company for the remaining $10,000. Ross made payments of $500 per month beginning in July 20X2. The loan balance was $7,000 on December 31, 20X2, and $1,000 on December 31, 20X3.

7.A disgruntled former employee told you that Ross has maintained a $1,500 a month apartment for his girlfriend since 20X0. You were able to corroborate this information.

8.You determine that Ross purchased a Rolex watch for $25,100 in February 20X2. In December 20X3, he spent $15,900 on various items for his girlfriend at Jimmy Choo.

9.His girlfriend told you that Ross has paid her monthly car payment of $300 since 20X1.

10.Ross purchased a boat in June 20X3 for $84,000.

11.Ross and his girlfriend took a vacation in 20X3 that cost $12,000.

12.The Ross Flower Shop had a net profit of $40,000 in 20X2, and $45,000 in 20X3.

Prepare net worth analysis for Richard Ross to determine whether he has income from unknown sources in 20X2 and 20X3.