Question

Total gross sales for the period include the following:

Credit card sales (discount 2%) $9,200
Sales on account (2/15, n/60) $10,000

Sales returns related to sales on account were $200. 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?

Answer 1

redit Card Sales:

Gross Sales = $10,300

Credit Card Discount = 2%*$10,300

Credit Card Discount = $206

Net Credit Card Sales = Gross Sales - Credit Card Discount

Net Credit Card Sales = $10,300 - $206

Net Credit Card Sales = $10,094

Sales on Account:

Gross Credit Sales = $10,600

Credit Sales Return = $200

Half of remaining sales were paid within the discount period.

Credit Sales Discount = $10,400*50%*2%

Credit Sales Discount = $104

Net Credit Sales = Gross Credit Sales - Credit Sales Return - Credit Sales Discount

Net Credit Sales = $10,600 - $200 - $104

Net Credit Sales = $10,296

Total Net Sales = $10,094 + $10,296

Total Net Sales = $20,390

So, Net Sales of $20,390.00 will be reported in income statement.