What factors does City Publications' management consider when evaluating individual customers' receivables?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. The Company had no cash equivalents as of December 31, 2024, and 2023.
NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounts Receivable
The timing of revenue recognition may be different from the timing of invoicing to customers. The Company records an accounts receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. Man
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, management considers several factors when evaluating individual customers' receivables. These include the customer's financial condition, their credit history, and the current economic conditions. This evaluation is part of the process of determining the collectibility of accounts receivable.
City Publications records accounts receivable when revenue is recognized before invoicing, and unearned revenue when revenue is recognized after invoicing. This is a standard accounting practice to align revenue recognition with the delivery of services, regardless of when the invoice is sent. Accounts receivable are written off if they are deemed uncollectible, and any subsequent recoveries of these previously written-off amounts are recorded as income when received.
For the years ending December 31, 2024, and 2023, City Publications did not have any allowance for doubtful accounts. The bad debt expense was $312 in 2024, $0 in 2023, and $26,102 in 2022. This indicates that City Publications has been generally successful in collecting its receivables, although there was a notable bad debt expense in 2022. Prospective franchisees should inquire about the reasons for the significant bad debt expense in 2022 and what measures have been taken to prevent similar occurrences in the future.