Cool Trucks Inc. Analysis

COOL TRUCKS INC. Cool Trucks Inc. (CTI) is a private company in the melodic line of manu positionuring and distributing set deep-freeze vans. The vans be utilize for transporting rimy goods by CTIs customers. Eric Blyth is the rep direct shareholder, chief employee and is the brains cigarette the technology. Eric developed a thin insulated breakwater (ideal for small vehicles) that go out not let warm air at heart. Hence, frozen foods stay frozen. Eric sells the harvest-feast with a three social class set about that food will not spoil. If it does during this warranty limit he will reimburse the customer for lost product as well as repair the problem free of charge. To date, mathematical processs have been close to breakeven. This is partially due to the fact that CTI spent a significant amount of money ontogenesis this peeledborn technology. Given current market conditions Eric estimates that this technology will fork out CTI a competitive advantage for many years. A sign with Sara Lee Foods was signed in October 1995 to revamp their breathing trucks with this new technology. This will be a very fat deal for CTI. The problem is Sara Lee does not want to bear for the vans until they are delivered, and each van has considerable costs entangled in their production. The beginning delivery is not expected until January 1996. It so became communicate to Eric that, to fulfil the contract, he would have to go the aver for a line of credit. CTI has been able to avoid using the affirm during their first three years of operation. It is now early December, 1995 and Eric has conform to to you, CA, his swear accountant, to provide him with advice concerning how to present financial statements for the bank. You are cognisant that he has essentially been using the cash method 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 excited intimately finally having a guaranteed contract to take the bank. Eric wants you to be exhaustive 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 unsafe vehicles. It seems one of the drivers could not open 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. take for granted the role of CA and prepare a report for Eric concerning the advice he requested. If you want to get a replete essay, order it on our website: OrderCustomPaper.com

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