Table of contents

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1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

A company sells goods with terms 1/10, net 30 for a total invoice amount of $800. If the customer pays within 10 days, what amount will be recorded as net sales?

$780

$792

$810

$800

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Verified step by step guidance

Understand the terms of the sale: '1/10, net 30' means the customer receives a 1% discount if payment is made within 10 days; otherwise, the full invoice amount is due within 30 days.

Identify the invoice amount: The total invoice amount is $800.

Calculate the discount: Multiply the invoice amount by the discount rate (1%). Using MathML, the formula is:

800 \times 0.01

Subtract the discount from the invoice amount to determine the net sales if the customer pays within 10 days. Using MathML, the formula is:

800 - 8

Record the net sales amount based on the payment timing: If the customer pays within 10 days, the discounted amount is recorded as net sales; otherwise, the full invoice amount is recorded.