| Summary of Significant Accounting Policies | 1. Summary
of Significant Accounting Policies Nature
of Operations Thanksgiving
Coffee Company, Inc. (the “Company”), a California Corporation, engages in sourcing, blending and roasting high quality
green coffee beans from small scale farmer co-ops worldwide with an emphasis on sustainability and fair trade certified coffee
beans. The Company operates from their headquarters on the Mendocino coast in Fort Bragg, California, where they package, market
and distribute the quality branded coffee products through retail and wholesale distribution processes in addition to an internet
presence. Method
of Accounting The
financial statements of the Company have been prepared on the accrual basis of accounting in accordance with generally accepted
accounting principles in the United States of America. Cash
and Cash Equivalents The
Company considers all highly liquid investments with original maturities of year or less at the time of purchase to be cash equivalents,
and maintain its cash in bank deposit accounts at high credit quality financial institutions. Effective January 1, 2013, all interest
bearing and non-interest bearing transaction accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to
$250,000 indefinitely. The Company periodically maintains cash balances in excess of FDIC coverage. Management considers this
to be a normal business risk. Concentration
of Credit Risk For
the years ending December 31, 2017, and December 31, 2016, one customer accounted for 10% and 10%, respectively, of the Company’s
revenue. The customer has serving locations and is a distributor of the Company’s product. The loss of this account could
have an adverse impact on the Company. As
of December 31, 2017, no single customer accounted for more than 10% of the Company’s accounts receivable. As of December
31, 2016, one customer accounted for approximately 10% of the Company’s accounts receivable. For
the years ending December 31, 2017 and 2016, one vendor accounted for 49%, and 49%, respectively, of the Company’s green
bean coffee purchases. See Note 6 to the financial statements. The loss of this vendor could have an adverse impact on the Company. As
of December 31, 2017, vendors A and B accounted for 25% and 11% of Company’s accounts payable. As of December 31, 2016,
vendors A, B, C and D accounted for 10%, 14%, 21% and 10% of the Company’s accounts payable. Accounts
Receivable The
Company extends credit to customers in the normal course of business and performs ongoing credit evaluations of customers, maintaining
allowances for potential credit losses which, when realized, have been within management’s expectations. Invoices are aged
based on terms with the customer. The Company utilizes a percentage method to establish the allowance for doubtful accounts. The
estimated allowance ranges from 1% to 10% of outstanding receivables based on factors pertaining to the credit risk of specific
customers, historical trends and other information. Delinquent accounts are written off when it is determined that amounts are
uncollectible. The allowance for doubtful accounts is based on historical information and recorded as a charge to operating expense.
At December 31, 2017 and 2016 the Company’s allowance for doubtful accounts was $6,239, $6,878, respectively. The
bad debt-write-offs for the years ended December 31, 2017, 2016 were $503, $1,641 respectively. Inventory Inventory
is stated at the lower of cost, determined using the first-in, first-out method, or market. Property
and Equipment Property
and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method for financial
reporting purposes and accelerated methods for income tax reporting purposes; maintenance and repair costs are charged against
operations as incurred. The estimated useful lives of the assets are as follows:
Estimated
Useful
Automobiles 5
years
Equipment
and fixtures 5
- 7 years
Office
furniture and equipment 5
- 7 years
Leased
equipment 5
- 12 years
Leasehold
improvements 7
- 39 years Revenue
Recognition Sales
are recognized when revenue is realized or becomes realizable and has been earned. In general, revenue is recognized when the
earnings process is complete, which is upon shipment of products. Shipping
and Handling Charges The
Company reports shipping and handling fees charged to customers as part of freight, an operating expense. The associated expense
is reported in the same account. Sales
Tax States
impose sales tax on certain sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire
amount to the state. The Company’s accounting policy is to exclude the tax collected and remitted to the state from revenues
and cost of goods sold. Advertising
Advertising
costs are expensed as incurred. The advertising costs incurred for the years ended December 31, 2017, and 2016, were $15,639,
$11,333, respectively. Comprehensive
Income The
Company has no components of other comprehensive income other than net income, and accordingly, the comprehensive income is equivalent
to the net income for the years presented. Income
Taxes The
Company accounts for income taxes under the asset and liability method. As such, deferred income tax assets and liabilities are
recognized for the future tax consequences of the differences between the financial statement carrying amount of existing assets
and liabilities and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A
valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. Uncertain
Tax Positions The
Company accounts for uncertainty in income taxes, by designating a recognition threshold and measurement attribute for financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also considers various
related matters such as de-recognition, interest, penalties, and disclosures required. The
Company’s management has determined that no unrecognized tax benefits or liabilities were to be recognized or disclosed
in the financial statements. The Company accrues interest and penalties associated with uncertain tax positions as a part of operating
expenses. As of December 31, 2017, and December 31, 2016, there were no accrued interest or penalties associated with uncertain
tax positions. Use
of Estimates The
preparation of financial statements in conformity with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying
notes. Accordingly, actual results could differ from those estimates. Recent
Relevant Accounting Guidance Not Yet Effective In
February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) Variable
Interest Entities The
Company holds a financial interest in an entity owned by its majority stockholders. The interest consists of the related party
leasing arrangement more fully described in Note 6 to these financial statements. This interest is considered to be a Variable
Interest Entity (VIE) for accounting purposes. Due to the nature and amount of the Company’s financial obligations with
respect to the VIE, the Company is not considered to financially control the VIE, therefore the Company is not required to consolidate
the VIE in these financial statements. |
