What method does Bumper Man use for valuing doubtful accounts receivable?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
g principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Bad Debts
The Company uses the reserve for bad debt method of valuing doubtful accounts receivable which is based on historical experience, coupled with a review of the current status of existing receivables. The balance of the reserve for do
Source: Item 23 — RECEIPTS (FDD pages 45–180)
What This Means (2025 FDD)
According to Bumper Man's 2025 Franchise Disclosure Document, the company uses the reserve for bad debt method to value doubtful accounts receivable. This valuation is based on historical experience and a review of the current status of existing receivables.
The reserve for doubtful accounts, which is deducted from trade accounts receivable, was $159,129 as of December 31, 2024. In the prior years, the reserve was $129,645 on December 31, 2023, and $120,787 on December 31, 2022.
For a prospective franchisee, this means that Bumper Man accounts for potential uncollectible receivables by estimating and reserving an amount based on past trends and current receivable conditions. The amounts reserved have increased over the three year period, which could reflect changing economic conditions or payment patterns among Bumper Man's customer base. Reviewing these trends may provide insight into the creditworthiness and payment behavior of Bumper Man's customer base.