Neco 2017 Financial Accounting Question 36

Alpha Ltd. prepared a trial balance as at 31\,December\,2016 (figures in \u20A6\,000). The balances were: Cash \(40\), Trade receivables \(60\), Inventory \(70\), Equipment (cost) \(500\), Accumulated depreciation - Equipment \(0\), Trade payables \(55\), Loan payable \(100\), Share capital \(200\), Retained earnings (opening) \(150\), Sales revenue \(500\), Cost of goods sold \(260\), Administrative expenses \(40\), Interest expense \(10\). The equipment has a useful life of 10 years, straight‑line, no residual value, and its net book value at year‑end is reported as \(320\). The company provides for doubtful debts at 5 % of trade receivables and pays a dividend of \(20\). The corporate tax rate is 30 %. Determine (a) the depreciation expense for the year, and (b) the closing retained earnings.