Multiple Choice
If a company reports gross sales of $7,000 and has sales returns and allowances of $500, what is the net sales amount?
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4. Merchandising Operations
Net Sales
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If a company sells five widgets at a list price of $100 each, offers sales discounts of $10 per widget, and has sales returns totaling $50, what is the company's net sales from these transactions?
A
$400
B
$350
C
$500
D
$450
Verified step by step guidance1
Step 1: Start by calculating the total revenue from the sale of widgets. Multiply the number of widgets sold (5) by the list price per widget ($100). This gives the gross sales revenue. Use the formula: Gross Sales Revenue = Number of Widgets × List Price.
Step 2: Deduct the total sales discounts from the gross sales revenue. Multiply the sales discount per widget ($10) by the number of widgets sold (5) to find the total discount. Use the formula: Total Discount = Number of Widgets × Discount per Widget.
Step 3: Subtract the total sales returns from the adjusted revenue after discounts. The sales returns are given as $50. Use the formula: Adjusted Revenue = Gross Sales Revenue - Total Discount - Sales Returns.
Step 4: The result from Step 3 represents the company's net sales. Net sales are calculated as the revenue after accounting for discounts and returns.
Step 5: Compare the calculated net sales to the provided answer choices ($400, $350, $500, $450) to identify the correct answer.
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