Question

Alvarado Company provides this information for the month ended October 31, 2014: sales on credit $307,900; cash sales $158,800; sales discounts $6,210; and sales returns and allowances $22,660. Prepare the sales revenues section of the income statement based on this information.

Answer 1

Alvarado Company

Amount in $ Amount in $

Sales:

Cash sales 158,800

Credit sales 307,900

Total sales 466,700

Less

sales discounts 6,210

sales returns and allowances 22,660

Total discounts, returns and allowance (28,870)

Net sales 437,830

Step-by-step explanation:

Sales discounts is a discount applied to the actual selling price of an item to reduce the price (as a benefit to the buyer). Sales returns and allowances are values of the items initially sold but returned by the buyer or customer.

Net sales is the difference between the total sales (cash and credit sales) and the total allowances, discounts and returns.