J.O. Cole, a sole proprietor, operates a trucking business. Cole also has assets and liabilities in connection with other activities. You are retained to audit the accounts of the J.O.C. Truck Lines and to prepare a report to be used to obtain credit, but you are not to audit Cole's other business affairs. You find that the accounts of Truck Lines are in proper order, but you are concerned about the fact that Cole has other business operations and that he will have to pay income tax as an individual on the income of Truck Lines. No provision for this personal tax liability appears in the accounts of the Truck Lines. 

1. Give a brief discussion of the problem of reporting presented by this engagement. 

2. Assuming that a standard report is to be used, draft the report for J.O.C. Truck Lines.