Question

In: Accounting

Calculate net sales: Cost of goods sold $74,500 Sales revenue $112,800 Operating expenses $23,600 Sales returns...

Calculate net sales:

Cost of goods sold $74,500
Sales revenue $112,800
Operating expenses $23,600
Sales returns $4,600
Sales discounts $6,700
Inventory purchases $80,530

Solutions

Expert Solution

Sales discount is a reduction in the price of product or service offered by the seller, in exchange of early payment by the buyer. The sales discount appears in income statement and is a contra Revenue account which means that it offsets gross sales, resulted into net sales

The representation of sales discount

Sales . xxxxx

Less: sales discount . ( xxxxx)

Net sales. xxxxxx

Sales returns or returns inward are a normal part of business. Goods may be returned to the supplier if they carry defect or if they are not according to the specifications of buyers.

There is a need to account for sales return as though no sales had occurred in the first place

Hence value of goods returned must be reduced from the sale Revenues

Calculation of net sales

Sales Revenues is $112,800

Sales discount is $6,700

Sales returns is $4,600

Gross sales . $112,800

Less

Sales disxdisc . ($6,700)

Sales returns. ($4,600)

Net sales. $101,500

Thanks

ekkarill92 answered 11 months ago
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