Interpretation of Accounts The following information has been taken from the accounts of Waldron Ltd for the year ended 31/12/2012: Trading and Profit and Loss Account for year ended 31/12/2012 Credit Sales € 420,000 Less: Cost of Sales Opening stock 01/01/2012 36,000 Add: Purchases ?????? Less: Closing stock 31/12/2012 24,000 Cost of sales 242,000 Gross Profit 178,000 Less: Total Expenses (including interest) 102,000 Net Profit for year 76,000 Balance Sheet as at 31/12/2012 Fixed Assets € 712,000 Current Assets (including Debtors €24,000) 83,000 Less Creditors: amounts falling due within 1 year Trade Creditors: 39,000 44,000 Financed by: Creditors: amounts falling due after more than 1 year 6% Debentures (2019/2020) 90,000 Capital and Reserves Authorised € 800,000 Issued 680,000 Profit and Loss Account 76,000 756,000 You are required to calculate: (to 2 decimal places where appropriate.) (i) The figure for Purchases - Leaving Cert Accounting - Question 5 - 2013

The Period of Credit given to Debtors is calculated by:

ext{Period of Credit} = rac{ ext{Debtors}}{ ext{Credit Sales}} imes 365

Substituting values gives:

Return on Capital Employed is calculated as:

ext{Return on Capital Employed} = rac{ ext{Net Profit}}{ ext{Capital Employed}} imes 100

Here, Capital Employed = 756,000. Thus:

To find the % Mark up on Cost:

ext{% Mark up on cost} = rac{ ext{Gross Profit}}{ ext{Cost of Sales}} imes 100

Substituting gives:

An Ordinary Dividend is part of the net profit paid out to ordinary shareholders, as decided by the Directors. It is a percentage of the Issued Ordinary share Capital.

Intangible Assets are assets that have real value but cannot be seen. Examples include patents or goodwill.

Carriage Inwards is the amount that the business has to pay for the cost of transporting goods to itself from suppliers.

Depreciation is the loss in value of a Fixed Asset over time due to wear and tear or the passage of time.

The Acid Test Ratio is calculated as:

ext{Acid Test Ratio} = rac{ ext{Current Assets} - ext{Stock}}{ ext{Current Liabilities}}

Substituting the values:

ext{Acid Test Ratio} = rac{83,000 - 24,000}{39,000} = 1.51

This ratio indicates that for every €1 owed by the company, there are liquid assets of €1.51.

The Return on Capital Employed for 2012 is 10.77%, which has decreased from 16% in 2011. This reduction in return indicates that while the firm has a positive return, it is less efficient in generating returns from its capital compared to the previous year.