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
Multiple Choice
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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