Multiple Choice
Which of the following best describes how 'Net Sales' is calculated on a company's income statement?
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4. Merchandising Operations
Net Sales
Multiple 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.
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