Question

Tian Company has provided the following information:

Cash sales, $450,000
Credit sales, $1,350,000
Selling and administrative expenses, $330,000
Sales returns and allowances, $90,000
Gross profit, $1,360,000
Increase in accounts receivable, $55,000
Bad debt expense, $33,000
Sales discounts, $43,000
Net income, $1,030,000

How much are Tian's net sales?

A. $307,000.
B. $252,000.
C. $440,000.
D. $340,000.

Answer 1

$1,667,000

Step-by-step explanation:

Net Sales is value of sales after deducting all the sales adjustable and contra account balance. In this question the Sales returns and allowances and sales discount accounts are contra sales account which need to be adjusted in the total sales value.

Total sales Value = Cash Sales + Credit Sales = $450,000 + $1,350,000 = $1,800,000

Net Sales = Total Sales - Sales returns and allowances - discount account

Net Sales = $1,800,000 - $90,000 - $43,000 = $1,667,000