What was the cash and restricted cash at the end of 2023 for Golden Krust Caribbean Restaurant?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
tements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Restricted Cash
The Company considers all highly liquid debt instruments purchased with an initial maturity of three months or less to be cash equivalents. Cash and restricted cash on the balance sheets includes $258,713 and $1,153,034 of restricted cash related to the Company's advertising fund, as of December 31, 2023 and 2022, respectively.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash and Restricted Cash (Continued)
The Company maintains an advertising fund, which is accounted for separately, as described in the Company's Franchise Disclosure Document (FDD). The Company's franchisee's make monthly contributions to the advertising fund based on a percentage of their respective sales. These funds are segregated to pay for franchise related advertising and cannot be used to defray general operating expenses of the Company, except as otherwise described in the FDD.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to the 2024 Franchise Disclosure Document, Golden Krust Caribbean Restaurant's cash and restricted cash balance at the end of 2023 included $258,713 of restricted cash related to the company's advertising fund. The document specifies that the company considers highly liquid debt instruments with an initial maturity of three months or less as cash equivalents. This cash and restricted cash is reported on the balance sheets.
The restricted cash is specifically tied to Golden Krust Caribbean Restaurant's advertising fund. This fund consists of monthly contributions from franchisees, calculated as a percentage of their sales. These funds are kept separate and are designated for franchise-related advertising expenses. According to the FDD, these funds cannot be used for the general operating expenses of the company, unless otherwise specified in the FDD.
It's worth noting that any unspent advertising revenues are recorded as accrued expenses on the balance sheets. However, as of December 31, 2023, there were no accrued advertising expenses, indicating that Golden Krust Caribbean Restaurant spent more on advertising than it received in advertising revenue from its franchisees. This detail provides insight into the company's advertising spending relative to franchisee contributions.