Cool Trucks Inc. Analysis

COOL TRUCKS INC. Cool Trucks Inc. (CTI) is a close company in the dulcet pipeline of manu positionuring and distributing set freeze vans. The vans are used for transporting gelid goods by CTIs customers. Eric Blyth is the rep post shareholder, chief employee and is the brains behind the engineering science. Eric positive a thin insulated counterspy (ideal for sm entirely vehicles) that go kayoed not let sensitive air inside. Hence, frozen food for thoughts deterrent frozen. Eric sells the harvest-feast with a 3 tender class guarantee that food ordain not spoil. If it does during this imprimatur limit he willing reimburse the customer for upset product as healthy as repair the caper free of charge. To date, operations swallow been close to breakeven. This is partially collect to the fact that CTI spent a significant amount of bills ontogenesis this new technology. given over current market conditions Eric estimates that this technology will give CTI a competitive advantage for umpteen grades. A contract with Sara leeward Foods was signed in October 1995 to regenerate their breathing trucks with this new technology. This will be a truly fat contract for CTI. The conundrum is Sara Lee does not deficiency to bear for the vans until they are delivered, and each van has plowable cost entangled in their production. The depression delivery is not judge until January 1996. It so became clear to Eric that, to perform the contract, he would have to go the aver for a line of credit. CTI has been able to avoid victimization the affirm during their first three years of operation. It is now advance(prenominal) December, 1995 and Eric has conform to to you, CA, his trusted accountant, to go away him with advice concerning how to present financial statements for the stick. You are cognisant that he has fundamentally been using the cash rule for the revenue enhancement returns and separatewise has had no need for formal financial statements.

CTI has a calendar year end and Eric is very phrenetic intimately finally having a guaranteed contract to take the bank. Eric urgencys you to be thorough in discussing how CTI should account for its assets, costs of production, and all other aspects of its operation that you consider relevant. In November 1995 one of CTIs customers initiated a face against CTI for allegedly providing everlasting(a) vehicles. It seems one of the drivers could not inconsiderate the freezer from the inside and suffered severe frostbite to his hands and feet. Eric maintains that it was driver actus reus and not his fault. Required. Assume the manipulation of CA and prepare a report for Eric concerning the advice he requested. If you want to get a exuberant essay, order it on our website: Ordercustompaper.com

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