Waec Model Questions Vol1 2017 Financial Accounting Question 18

Beta Ltd. prepared the following information for the year ended 31 December 2022: Sales: ₦600,000 Cost of goods sold: ₦350,000 Operating expenses (excluding depreciation): ₦80,000 Interest expense: ₦10,000 Depreciation rates: Machinery 10% p.a. on cost, Buildings 5% p.a. on cost. At the beginning of the year, machinery cost was ₦200,000 with accumulated depreciation ₦40,000, and buildings cost was ₦300,000 with accumulated depreciation ₦100,000. During the year, a machine was sold for ₦50,000; its accumulated depreciation at the date of sale was ₦30,000. The company's opening retained earnings were ₦150,000 and drawings for the year were ₦80,000. Tax is charged at 20% of profit before tax. Determine (a) profit after tax for the year and (b) the closing retained earnings balance.