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

If Reese's gross sales for the period are $1,000, sales returns and allowances are $100, and sales discounts are $50, what is Reese's net sales?

$950

$900

$1,000

$850

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Verified step by step guidance

Step 1: Understand the concept of net sales. Net sales are calculated by subtracting sales returns, allowances, and discounts from gross sales. The formula is:

Net Sales = Gross Sales - Sales Returns & Allowances - Sales Discounts

Step 2: Identify the values provided in the problem. Gross sales are $1,000, sales returns and allowances are $100, and sales discounts are $50.

Step 3: Substitute the values into the formula. Replace 'Gross Sales' with $1,000, 'Sales Returns & Allowances' with $100, and 'Sales Discounts' with $50 in the formula.

Step 4: Perform the subtraction step-by-step. First, subtract sales returns and allowances ($100) from gross sales ($1,000). Then subtract sales discounts ($50) from the result.

Step 5: The result after performing these calculations will give Reese's net sales. Ensure you understand how each deduction impacts the gross sales to arrive at the net sales figure.