What is the amount of notes receivable, current, for Ledgers in 2023?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2 | Assets | ||||||
|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | |||||
| Current Assets: | S | ||||||
| Cash and cash equivalents | $ 424,085 | $ 181,077 | $ 264,411 | ||||
| Royalty receivables | 3,190 | 3,302 | - | ||||
| Notes receivable, current | 40,760 | 229,901 | |||||
| Total Current Assets | 427,275 | 225,139 | 494,312 |
| 2 | 024 | 2023 | 2022 | |
|---|---|---|---|---|
| Notes receivable - Principal | $ | $ 40,000 | $ 853,748 | |
| Notes receivable - Accrued interest | 7 | - | 16,607 | 10,153 |
| = | 56,607 | 863,901 | ||
| Allowance for credit losses | §2 | == | (15,847) |
NOTE 4 - NOTES RECEIVABLE
Notes receivable consists of financed area representative and unit franchise agreements. Promissory notes boar interest up to 12%. Amounts due as of December 31 are as follows:
During the year ended December 31, 2023, the Company's financial statements included balances for a note receivable and deferred revenue for a franchise agreement that was terminated in 2023 but not properly written off in 2023. During the year ended December 31, 2024, the Company identified this error and restated its financial statements to properly recognize the termination of the franchise agreement recording $219,118 in bad debt expense for the year ended December 31, 2023 and removing the $752,118 note receivable, and $533,000 deferred revenue balances at December 31, 2023.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, the notes receivable, current, for 2023 is $40,760. This represents the amount of money owed to Ledgers that is expected to be collected within the next year. Notes receivable typically arise from financing arrangements related to area representative and unit franchise agreements. These promissory notes may bear interest up to 12%.
It is important to note that the notes receivable balance is presented net of an allowance for credit losses. This allowance represents Ledgers' estimate of the amount of notes receivable that may not be collectible. The notes receivable consist of principal of $40,000 and accrued interest of $16,607, with an allowance for credit losses of $15,847, resulting in the net amount of $40,760.
Prospective franchisees should be aware of how Ledgers manages and accounts for its notes receivable, as this can impact the company's financial stability. Understanding the terms of the promissory notes, the interest rates charged, and the criteria used to determine the allowance for credit losses can provide valuable insights into the risk associated with these assets. Additionally, it's worth noting that the financial statements for 2023 were restated due to an error related to a terminated franchise agreement, which impacted the notes receivable balance.