Multiple Choice
Which of the following best describes how 'Net Sales' is calculated on a company's income statement?
19
views
4. Merchandising Operations
Net Sales
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
If a company sells 20 video games at a list price of $50 each, offers sales discounts of $5 per game, and has sales returns totaling $100, what is the net sales revenue from these transactions?
A
$900
B
$950
C
$800
D
$1,000
Verified step by step guidance1
Step 1: Calculate the gross sales revenue by multiplying the number of video games sold (20) by the list price per game ($50). Use the formula: Gross Sales Revenue = Quantity × List Price.
Step 2: Determine the total sales discounts by multiplying the number of video games sold (20) by the discount per game ($5). Use the formula: Total Sales Discounts = Quantity × Discount per game.
Step 3: Subtract the total sales discounts from the gross sales revenue to calculate the adjusted sales revenue. Use the formula: Adjusted Sales Revenue = Gross Sales Revenue - Total Sales Discounts.
Step 4: Account for the sales returns by subtracting the total sales returns ($100) from the adjusted sales revenue. Use the formula: Net Sales Revenue = Adjusted Sales Revenue - Sales Returns.
Step 5: The resulting value from Step 4 represents the net sales revenue, which is the final amount after accounting for discounts and returns.
9:04mWatch next
Master Net Sales:Sales Discounts (Gross Method) with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
