What was the write-off mentioned for 2024?

What was the write-off mentioned for 2024?

• A. £50k bad debt from a supplier
• B. £79k bad debt from the TTH sponsor that went into receivership
• C. £100k cash write-off for charity
• D. £20k miscellaneous

Answer: (B)

The main idea here is recognizing an uncollectible receivable when a debtor can no longer pay. When someone who owes you money becomes insolvent, you must write off that amount as a bad debt in the period the insolvency is evident, reducing accounts receivable and affecting profit for that year. In this case, the TTH sponsor went into receivership, making the £79,000 owed by that sponsor unrecoverable. That specific event creates a valid write-off for 2024, which is why this option is the correct one. The other figures don’t fit the scenario: a £50k bad debt from a supplier would imply money owed to you by a supplier rather than a sponsor going into insolvency; a £100k cash write-off for charity would typically reflect a donation or impairment rather than a bad debt arising from insolvency; and £20k miscellaneous is too vague and not tied to the notable event described.

The main idea here is recognizing an uncollectible receivable when a debtor can no longer pay. When someone who owes you money becomes insolvent, you must write off that amount as a bad debt in the period the insolvency is evident, reducing accounts receivable and affecting profit for that year.

In this case, the TTH sponsor went into receivership, making the £79,000 owed by that sponsor unrecoverable. That specific event creates a valid write-off for 2024, which is why this option is the correct one.

The other figures don’t fit the scenario: a £50k bad debt from a supplier would imply money owed to you by a supplier rather than a sponsor going into insolvency; a £100k cash write-off for charity would typically reflect a donation or impairment rather than a bad debt arising from insolvency; and £20k miscellaneous is too vague and not tied to the notable event described.