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    homeworkkhelps's Avatar
    homeworkkhelps Posts: 1, Reputation: 1
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    #1

    Mar 17, 2012, 11:52 AM
    The impact of credit card sales, sales discounts, and sales returns on net sales
    Total gross sales for the period include the following:


    Credit card sales (discount 3%) $ 9,400
    Sales on account (2/15, n/60) $ 10,500


    Sales returns related to sales on account were $500. All returns were made before payment. One-half of the remaining sales on account were paid within the discount period. The company treats all discounts and returns as contra-revenues.


    What amount will be reported on the income statement as net sales?
    ACCTGUY's Avatar
    ACCTGUY Posts: 22, Reputation: 1
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    #2

    Apr 15, 2012, 06:33 AM
    Lets say Credit Card Sales ( Discount 3%) $ 9400 * .03 = 282 DISCOUNT
    Sales 9118

    Sales on Account (2/15 n/60) $ 10500
    Sales returns related to sales on account were $500
    Remaining sales on account $ 10000 (2/15 n/60)

    One-half of the remaining sales on account were paid within the discount period
    One half is $ 5000 we calculated 2/15
    It comes to $ 100 discount for early payment
    Comes to $ 4900

    Remainging $ 5000 sales will be $ 5000


    So
    Sales 9400 + 10500
    Sales Returns and Allowances ($ 500)
    Sales Discounts ( $ 382)
    Net Sales $ 19018
    COGS (x)
    GROSS PROFIT ON SALE (X)

    But usually companies don't give discounts to use credit card. Because Credit Card companies charge fees to business too.


    Hope if make sense

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