The current$-$year reserve as a percentage of gross receivables is consistent with prior years although there was an increase in revenues, gross receivables, and the related reserve.

Retrospective review of receivable collections indicates that management's reserves have historically been accurate.

Economic conditions have been unstable, and the predictability of future conditions is limited$.$

Revenues increased substantially year over year as a result of the introduction of a new product line.

The new product line is marketed toward customers in the restaurant industry, in which the entity does not currently have an established customer base.

The restaurant industry generally has a higher rate of business failure than other customer segments.

The entity's collections experience has primarily been with customers in the retail and professional services industries; the entity has minimal collections experience with the new product line, given the recent launch.

Approved sales terms have not changed year to year $($e$.$g$.,$ sales personnel may offer an extension of credit of up to $100$ percent of the purchase price consistent with prior year, criteria applied to evaluate customer creditworthiness is consistent with prior year, payment terms are consistent with prior year$).$

Sales of the new product line are more frequently $100$ percent financed in contrast to sales of the existing product lines, resulting in an increase in gross receivables.

Competitors who manufacture similar restaurant furniture products have higher reserves as a percentage of their trade receivables.

Part $2$ Requirements:

Using the table below, list$/$summarize the confirming $($supporting management's position$)$ and contradictory $($NOT supporting management's position$)$ audit evidence noted in the above scenario $($NOTE: each bullet point represents $1$ piece of evidence$).$

Hint: First articulate for yourself what is management's desired position in terms of the assumption auditors are tasked to test. Doing so will help you consider confirming vs$.$ contradictory evidence. Don't forget in general management's incentives$/$pressures$.$ Each piece of evidence above should be categorized as either confirming or contradictory evidence.

I provide one example in the table set up below to help you get started.

$\backslash$table$[[$Confirming Evidence,Contradictory Evidence$],[\backslash$table$[[$Bad debt expense has remained consistent as$],[$a percentage of gross revenue over the past$],[$several years.$]],],[dots,$dots