Accounts Receivable, Short-Term and Long-Term Notes Receivable

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Accounts Receivable, Short-Term and Long-Term Notes Receivable

Management reviews accounts receivable, short-term and long-term notes receivable on a monthly basis to determine if any receivables are potentially uncollectible. An allowance for doubtful accounts is determined based on a combination of historical experience, length of time outstanding, customer credit worthiness, and current economic trends. We recorded a bad debt expense of $35,211 during the three months ended March 31, 2017 and wrote off uncollectable accounts during the three months ended March 31, 2017 in the amount of $11,211. As of March 31, 2017, the Company has recorded an allowance for doubtful accounts of $1,820,000.

Notes receivable aged over 30 days past due are considered delinquent and notes receivable aged over 60 days past due with known collection issues are placed on non-accrual status. Interest revenue is not recognized on notes receivable while on non-accrual status. Cash payments received on non-accrual receivables are applied towards the principal. When notes receivable on non-accrual status are again less than 60 days past due, recognition of interest revenue for notes receivable is resumed.  The Company charges interest rates on notes receivable averaging 13%.  The Company recorded $3,882 in interest income for the three months ended March 31, 2017.

The allowance for doubtful accounts on long-term receivables is the Company's best estimate of the amount of probable credit losses related to the Company's existing note receivables.  The allowance for doubtful accounts is the Company's best estimate of probable credit losses related to trade receivables and notes receivable based upon the aging of the receivables, historical collection data, internal assessments of credit quality and the economic conditions in the business subprime industry, as well as in the economy as a whole. The Company charges off uncollectable amounts against the reserve in the period in which it determines they are uncollectable. Unearned income on notes receivable is amortized using the effective interest method.  The Company determines the allowance for doubtful accounts related to notes receivable based upon a reserve for known collection issues, as well as a reserve based upon aging, both of which are based upon history of such losses and current economic conditions. Based upon the Company's methodology, the notes receivable balances with reserves and the reserves associated with those balances are as follows:

	March 31, 2017
	Gross				Reserve				Net
	Current		Long-Term		Current		Long-Term		Current		Long-Term
Customer Notes Receivable		766,675		406,888		749,638		400,901		17,037		5,987
Accounts Receivable		1,001,665		-		669,461		-		332,204		-

	December 31, 2016
	Gross				Reserve				Net
	Current		Long-Term		Current		Long-Term		Current		Long-Term
Customer Notes Receivable		793,988		414,665		767,138		399,401		26,850		15,264
Accounts Receivable		921,829		-		629,461		-		292,368		-

The roll forward of the allowance for doubtful accounts related to notes receivable and accounts receivable is as follows:

	Notes Receivable Reserve					Accounts Receivable Reserve
	Current			Long-Term		Current
Balance at December 31, 2016	$	767,138		$	399,401	$	629,461
Incremental (Reduction in) Provision		(10,378	)		1,500		44,089
Recoveries		-			-		-
Charge offs		(7,122	)		-		(4,089	)
Balance at March 31, 2017	$	749,638		$	400,901	$	669,461

The allowance for doubtful accounts as a percentage of total receivables was approximately 84% as of March 31, 2017 and approximately 84% as of December 31, 2016.