Question

The adjusted trial balance of Doqe Company shows these data pertaining to sales at the end of its fiscal year, October 31, 2022: Sales Revenue ($ 900,000); Freight-Out ($ 14,000; ) Sales Returns and Allowances" and "Net Sales.

Answer 1

The calculation of Net Sales requires subtracting Sales Returns and Allowances and Freight-Out from Sales Revenue. Without the figure for Sales Returns and Allowances, the Net Sales of Doqe Company cannot be determined from the given data. An example of accounting profit calculation was provided for clarity.

Step-by-step explanation:

The student's question relates to the calculation of Net Sales in a company's financial statement. Net Sales is calculated by subtracting any Sales Returns and Allowances and Freight-Out expenses from the Sales Revenue. If Sales Revenue is $900,000 and Freight-Out costs total $14,000, but we do not have the exact figure for Sales Returns and Allowances, we cannot determine Net Sales without that figure. It is essential to have all aspects affecting Net Sales to calculate it accurately.

As a self-check, consider a firm with sales revenue of $1 million. The expenses for labor, capital, and materials are $600,000, $150,000, and $200,000 respectively. The firm's accounting profit would be the sales revenue minus these expenses, which equals $50,000.