Question

The adjusted trial balance of Oriole Company shows these data pertaining to sales at the end of its fiscal year, October 31, 2022: Sales Revenue $908,900; Freight-Out $14,400; Sales Returns and Allowances $21,700; and Sales Discounts $14,000. Prepare the sales section of the income statement.

Answer 1

To prepare the sales section of the income statement, start with Sales Revenue and deduct Sales Returns and Allowances and Sales Discounts to determine Net Sales. Freight-Out is not deducted from sales revenue. The Net Sales calculated for Oriole Company is $873,200.

Step-by-step explanation:

Sales Section of the Income Statement

To prepare the sales section of the income statement for the Oriole Company, we start with the Sales Revenue and subtract Sales Returns and Allowances and Sales Discounts to calculate the Net Sales. The Freight-Out cost is typically considered an operating expense and not deducted from sales revenue directly. Here is the calculation:

• 
  
• Sales Revenue: $908,900
• 
  
• Less: Sales Returns and Allowances: $21,700
• 
  
• Less: Sales Discounts: $14,000

Net Sales = $908,900 - $21,700 - $14,000 = $873,200

The Net Sales amount of $873,200 will be reported on the income statement as the net amount earned from sales during the fiscal year ending October 31, 2022.