What was the beginning balance of accounts receivable for Engineering For Kids as of January 1, 2022?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
h and Cash Equivalents
The Company considers all investments with an original maturity of three months or less when purchased to be cash equivalents.
Accounts Receivable and Credit Losses
The Company is exposed to credit losses primarily through sales of services. Accounts receivable represent the Company's unconditional right to consideration in exchange for services that the Company has provided to the customer based on contracted prices. Accounts receivable are recorded when invoices are issued and are presented on the balance sheet at the amount management expects to collect. Management provides for probable uncollectible amounts through credit losses expense and an adjustment to the allowance for credit losses. The Company's expected loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions, and a review of the current status of customers' accounts receivable. The beginning balance of accounts receivable was $17,369 at January 1, 2022. Due to the short-term nature of such receivables, the estimated accounts receivable that may not be collected is based on aging of the accounts receivable balances.
The Company evaluates contract terms and conditions, economic and industry risk, customer credit worthiness, and may require prepayment to mitigate risk of loss. Specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company monitors changes to the receivables balance
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to Engineering For Kids's 2025 Franchise Disclosure Document, the beginning balance of accounts receivable for Engineering For Kids International, LLC was $17,369 as of January 1, 2022. Accounts receivable represent the company's unconditional right to receive payment for services already provided to customers, based on contracted prices. These receivables are recorded when invoices are issued and are presented on the balance sheet at the amount management expects to collect.
Engineering For Kids manages potential credit losses by assessing the probability of uncollectible amounts. This is done through credit losses expense and an adjustment to the allowance for credit losses. The company's methodology considers historical collection experience, current and future economic conditions, and a review of the current status of customer accounts. Given the short-term nature of these receivables, the estimated amount that may not be collected is based on the aging of the accounts receivable balances.
To mitigate the risk of loss, Engineering For Kids evaluates contract terms, economic and industry risks, and customer creditworthiness, and may require prepayment. Specific allowance amounts are established for customers with a higher probability of default. The company monitors changes to the receivables balance regularly and writes off balances deemed uncollectible after all collection efforts have been exhausted. This proactive approach to managing accounts receivable helps Engineering For Kids maintain a healthy financial position.