Question

Total gross sales for the period include the following: credit card sales (discount 2%) $9,100 sales on account (2/15, n/60) $10,900 sales returns related to sales on account were $650. all returns were made before payment. one-half of the remaining sales on account were paid within the discount period. the company treats all discounts and returns as contra-revenues. what amount will be reported on the income statement as net sales? note: do not round intermediate calculations. round your answer to 2 decimal places.

Answer 1

Net sales are calculated by taking the total gross sales and adjusting for any sales discounts, credit card discounts, and sales returns. In this scenario, the net sales amount to be reported on the income statement is $19,065.50 after taking all the necessary adjustments into account.

Step-by-step explanation:

To calculate the net sales, we must consider the credit card sales, sales on account, sales returns, and any discounts for early payment. First, we subtract the credit card discount from the credit card sales: $9,100 - (2% of $9,100) = $9,100 - $182 = $8,918. Next, we subtract the sales returns from the sales on account: $10,900 - $650 = $10,250. Since half of the remaining sales on account were paid within the discount period, we apply a discount to that half: 0.5 x $10,250 = $5,125; discount = 2% of $5,125 = $102.50. We subtract the discount from the sales on account paid within the discount period: $5,125 - $102.50 = $5,022.50. Adding this to the other half of sales on account that did not receive the discount ($5,125), plus the credit card sales after discount ($8,918), we get the total net sales: $5,022.50 + $5,125 + $8,918 = $19,065.50. This amount will be reported on the income statement as net sales.