You are auditing Xaxa $($Pty$)$ Ltd $(xx),$ a group of fashion boutiques that operates shops at all the popular shopping centres in Gauteng.

Due to the expensive nature of the clothing and accessories, XX allows sales on credit to customers to ensure maximum sales. Before they allow sales on credit, the customer has to complete an application form that will be reviewed by the credit department at the head office. After the review, a credit limit is determined that is strictly applied by XX$.$

History has however shown that despite the credit limits and strict enforcement, there are still trade receivables that are unable to pay their outstanding accounts. XX therefore calculates expected future credit losses and makes a provision for it using the information in the following table:

$\backslash$table$[[,R,$Expected default rate$],[$Amounts owing $1-30$ days,$15000000,0\mathrm{.}3\%$