Question

Credit card sales (discount 3%) $ 8,600 Sales on account (3/15, n/60) $ 10,400 Sales returns related to sales on account were $500. 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

$18192.50

Explanation:

From the information given;

The amount that will be reported on the income statement as net sales can be computed as follows:

Particulars Amount ($)

Sales revenue $(8600 + 10400) $19000

Less: Credit card discounts

( contra - revenue) $(8600 × 3%) 258

Sales discounts

( contra - revenue)

[(10400 - 500)× 1/2 × 0.01 ] 49.50

Sales return and allowances

( contra - revenue ) 500

The net sale

(reported on the income statement) = $18192.50