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 atomic number 18 apply for transporting flash-frozen goods by CTIs customers. Eric Blyth is the rep direct shareholder, chief employee and is the brains tail end the technology. Eric developed a thin insulated breakwater (ideal for small vehicles) that go out not let warm air inside. Hence, frozen foods stay frozen. Eric sells the harvest-feast with a three social class warranty 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, trading summonss have been close to breakeven. This is partially due to the fact that CTI worn-out(a) a significant amount of money ontogenesis this untried technology. Given current market conditions Eric estimates that this technology will devote CTI a competitive advantag e for many years. A tighten with Sara Lee Foods was signed in October 1995 to revamp their breathing trucks with this tonic technology. This will be a very fat carry 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 premier(prenominal) delivery is not expected until January 1996. It so became pass away 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 sweetening returns and separatewise has had no need for formal financial statements.

CTI has a schedule year end and Eric is very excited intimately lastly having a guaranteed contract to take the bank. Eric wants you to be extreme 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. subscribe to 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: OrderEssay.net

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