*8.7 A sole trader's bad and doubtful debts account for the year ended 31 March 2010 is as follows:

£ £ £ £

Trade debts written off 638 Allowances b/f Allowances c/f General 200 General 150 Specific 231 431 Specific 317 467 ——

—— Staff loan recovered 500 Income statement 174

—— ——

1,105 1,105

—— ——

The staff loan recovered was not allowable as a trade expense when it was originally written off. How much of the £174 charged to the income statement for the year should be added back when calculating trading profit?