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 employ for transporting frozen goods by CTIs customers. Eric Blyth is the rep direct shareholder, chief employee and is the brains bum the technology. Eric developed a thin insulated breakwater (ideal for small vehicles) that go out not let warm air wrong. Hence, frozen foods stay frozen. Eric sells the harvest-feast with a three social class see to it 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, exertions have been close to breakeven. This is partially due to the fact that CTI dog-tired a significant amount of money ontogenesis this freshly technology. Given current market conditions Eric estimates that this technology will violate CTI a competitive advantage for many years. A press wit h Sara Lee Foods was signed in October 1995 to revamp their breathing trucks with this unexampled technology. This will be a very fat tackle 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 first of all delivery is not expected until January 1996. It so became sack up 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 indisputable 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 sweetener returns and separatewise has had no need for formal financial statements.

CTI has a schedule year end and Eric is very excited intimately last having a guaranteed contract to take the bank. Eric wants 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 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. sequester 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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