Question

please explain

Know and understand how to calculate net sales

Know and understand how to calculate gross profit rate

how to calculate cost of goods sold based on available information

how to calculate cost of goods purchased based on available information

how to calculate net sales revenue based on available information

how to calculate net purchases based on available information

Answer 1

1) Net sales

Net sales are the sum of a company’s gross sales minus its returns, allowances, and discount.
So, the formula for net sales is:

Net Sales = Gross Sales – Returns – Allowances – Discounts

When the difference between a business’s gross and net sales is greater than the industry average, the company may be offering higher discounts or experiencing an excessive amount of returns compared to their industry counterparts.

2) Gross profit rate

The gross profit percentage formula is calculated by subtracting the cost of goods sold from total revenue and dividing the difference in total revenue.

Once you determine gross profit, you can calculate the gross profit rate by dividing the gross profit by net sales. For example, say that a company has a net sales of $ 594,000 and a cost of goods of $ 300,000 sales. Gross profit is $ 594,000 minus $ 300,000, or $ 294,000. The gross profit rate is $ 594,000, or $ 294,000 divided by 0.49.

3) Cost of goods sold

COGS = Beginning Inventory + Purchases During the Period – Ending Inventory

Your beginning inventory is whatever inventory is left over from the previous period. Then, add the cost of what you purchased during the period. Subtract whatever inventory you did not sell at the end of the period.

Your business's initial inventory is $ 7,000, valued at $ 4,000, and left with a $ 2,000 end inventory. Use the COGS formula.

COGS = $ 7,000 $ 4,000 - $ 2,000

COGS = $ 9,000

Your cost of goods sold for the year is $ 9,000. Knowing this number helps you make decisions, such as finding new vendors with better direct content prices.

Now that you know your COGS, you can get the gross profit of your business for the period.

Suppose you have a revenue of $ 70,000. Reduce your $ 9,000 COGS from $ 70,000. For the period, your gross income is $ 61,000.

4) Cost of goods purchased

The cost of goods made or bought is adjusted according to the change in inventory. For example, if 500 units are made or bought but inventory rises by 50 units, then the cost of 450 units is the cost of goods sold. If inventory decreases by 50 units, the cost of 550 units is the cost of goods sold.

5) Net sales revenue

Net sales is the sum of a company's gross sales minus its returns, allowances, and discounts. Net sales calculations are not always transparent externally. They can often be factored into the reporting of top line revenues reported on the income statement.

Net Sales = Gross Sales – Returns – Allowances – Discounts

An income statement is a financial statement that reveals how much income your business is making and where it is going. The net sales figure on an income statement shows how much revenue remains from gross sales when sales discounts, returns, and allowances are subtracted.

Gross sales is the total unadjusted income your business earned during a set time period. This figure includes all cash, credit card, debit card, and trade credit sales before deducting sales discounts and the amounts for merchandise discounts and allowances. With the cash accounting method, gross sales are only the sales that you have received payment. If your company uses the accrual accounting method, gross sales include all your cash and credit sales.

6) Net purchases

Net purchases are found by subtracting the credit balances in the purchases returns and allowances and purchases discounts accounts from the debit balance in the purchases account The cost of goods purchased equals net purchases plus the freight‐in account's debit balance.

Net Purchase = Purchase -Returns- Allowences-Discounts