How are accounts receivable recorded by the Gokhale Method?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
Accounts receivable is primarily comprised of net royalty receivables from franchise, teachers, or class fees collected by GME.
The Company utilizes the allowance method of accounting for doubtful accounts. The allowance is based on management's review of all past due accounts. As of December 31, 2022, management believes that all receivables are collectable after year end.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, accounts receivable primarily consist of net royalty receivables from franchisees, teachers, or class fees collected by Gokhale Method Enterprise, Inc. (GME).
The Gokhale Method utilizes the allowance method of accounting for doubtful accounts. This means that the company sets aside an allowance based on management's review of past due accounts to cover potential losses from receivables that may not be collected.
As of December 31, 2022, the Gokhale Method's management believed that all receivables were collectible after year end. This indicates that, at that time, they did not consider any accounts to be doubtful or require an allowance for doubtful accounts. A prospective franchisee should inquire about the current status of collectibility of accounts receivable and the criteria used by management to assess the allowance for doubtful accounts to understand the potential risk of uncollectible receivables.