Multiple Choice
Which of the following would be classified as a general expense on an income statement?
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4. Merchandising Operations
Net Sales
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If a company has gross sales of \$50,000, sales returns and allowances of \$2,000, and sales discounts of \$1,000, what is the company's net sales?
A
\$48,000
B
\$47,000
C
\$50,000
D
\$49,000
Verified step by step guidance1
Step 1: Understand the formula for calculating net sales. Net sales is calculated as Gross Sales minus Sales Returns and Allowances minus Sales Discounts.
Step 2: Identify the given values in the problem. Gross Sales = \$50,000, Sales Returns and Allowances = \$2,000, and Sales Discounts = \$1,000.
Step 3: Substitute the given values into the formula for net sales: Net Sales = Gross Sales - Sales Returns and Allowances - Sales Discounts.
Step 4: Perform the subtraction operations step by step. First, subtract Sales Returns and Allowances from Gross Sales, then subtract Sales Discounts from the result.
Step 5: The final result will give you the company's net sales, which is the amount remaining after accounting for returns, allowances, and discounts.
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