The pre-adjustment trial balance of JAM Traders as at 28 February 20.19. reflected an allowance for credit losses that amounts to R990 and credit losses amounting to R345 (credit losses were written off using method 1 although they were not aware of these two methods as explained below) The financial manager of JAM Traders determined that the allowance for credit losses for the current financial year ended 28 February 20.19 must be R1 435 and cred t losses that must still be written off amounts to R780.

The financial manager, after having a discussion with the bookkeeper of JAM Traders. learned that there are two methods that can be used to write off the above credit losses of R780.