Case 9.7 RedPack Beer Company covers estimating allowance for bad debt
 Following your analysis of the information in Schedules A-D, assume that you met with RedPack’s Credit Manager, Katie Henson, to ask her a number of questions related to specific customer accounts in the Accounts Receivable Aged Trial Balance. A transcript of your interview notes is provided as Schedule E. Use that information to address the following:
[a] Based on your reading of the transcript, do you agree with the specific reserves established by the credit manager for Distinct Beer Distributor, Eagle Beverage Group, and Golden Holdings? If yes why? If no what do you believe the specific reserves should be and why?
[b] Based on your reading of the transcript discussion, would you have any concerns with other aspects related to the reporting of revenues and accounts receivable? Explain your answer.
[c] Based on the information you have, develop an estimate of the account balance for the allowance for bad debts and compare your expectation to the client’s estimate summarized in Schedule B for the allowance for bad debts. Does the amount you estimated agree with the client’s estimate in Schedule B? If it does not agree, by how much does it differ and is that difference material?
[d] Determine the adjusting journal entry(ies) needed, if any, to adjust management’s estimate of the reserve to your audited estimate and post your entries in the Adjustments column in Schedule A.
[e] Based on your reading of the professional standards in requirement 1 above, what additional procedures would you need to perform to conclude on the adequacy of the allowance for bad debt?
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