What was the provision for doubtful accounts (recoveries) for Big Apple Bagels in 2023?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
| Years Ended November 30, 2024, 2023 and 2022 | ||||
|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||
| Operating Activities | ||||
| Net Income | $ 433,770 | $ 432,927 | $ 429,951 | |
| Adjustments to reconcile net income to cash | ||||
| flows provided by operating activities: | ||||
| Depreciation | - | - | 748 | |
| Provision for doubtful accounts (recoveries) | 22,230 | 18,000 | (3,005) | |
| Loss on sales-type lease termination | 11,659 | - | (5,319) | |
| Deferred income tax (benefit)/expense | 4,150 | 19,448 | 75,966 | |
| Changes in: | ||||
| Trade accounts, notes and lease receivable | (278) | (32,537) | (28,999) | |
| Marketing Fund contributions receivable | (2,399) | (2,184) | 13,275 | |
| Prepaid expenses and other assets | 14,253 | 23,594 | (12,186) | |
| Accounts payable and accrued expenses | 79,167 | 7,312 | 8,680 | |
| Unexpended Marketing Fund | ||||
| franchisee contributions | (37,068) | (89,563) | (329,148) | |
| Deferred franchise fee revenue | (40,673) | 50,168 | 16,850 | |
| Net Cash Provided by Operating Activities | 484,811 | 427,165 | 166,813 | |
| Investing Activities | ||||
| Sale of equipment | 16,700 | - | - | |
| Advances to affiliates (net of repayments) | (172,652) | (276,802) | (324,240) | |
| Issuance of note receivable | (25,610) | - | - | |
| Net Cash Used in Investing Activities | (181,562) | (276,802) | (324,240) | |
| (Decrease)/Increase in Cash | 303,249 | 150,363 | (157,427) | |
| Cash and Restricted Cash, Beginning of Year | 2,034,040 | 1,883,677 | 2,041,104 | |
| Cash and Restricted Cash, End of Year | $ 2,337,289 | $ 2,034,040 | $ 1,883,677 | |
| Supplemental disclosure of cash flow information: | ||||
| Taxes paid (recorded through inter-company account) | $ 165,857 | $ 158,550 | $ 117,841 | |
| Interest paid | $ - | $ - | $ - | |
| Non-cash operating and investing activities | ||||
| Asset held for resale offsetting lease termination loss | $ 4,500 | $ - | $ - | |
| Adopted Accounting Pronouncements | ||||
| In June | 2016, November 30, | the FASB November 30, | issued ASU | 2016-13, |
Source: Item 23 — RECEIPTS (FDD pages 87–319)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, the provision for doubtful accounts (recoveries) in 2023 was $18,000. This figure is part of the adjustments made to reconcile net income to the net cash flows provided by operating activities.
A 'provision for doubtful accounts' is an expense that Big Apple Bagels recognizes to account for the risk that some of its accounts receivable may not be collected. When the company anticipates that some customers will not pay what they owe, it sets aside a portion of its revenue as an allowance for these potential credit losses. This is a standard accounting practice to ensure that financial statements accurately reflect the company's financial health.
The fact that Big Apple Bagels had a provision of $18,000 in 2023 suggests that the company anticipated some level of uncollectible accounts during that year. For a prospective franchisee, this indicates that Big Apple Bagels management is proactively managing and accounting for potential financial risks associated with outstanding payments. It's worth noting that the actual amount of uncollectible accounts may differ from this provision, as it is based on estimates and assumptions.