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?

• A. \$950
• B. \$900
• C. \$1,000
• D. \$850

Answer: (D)

Verified step by step guidance

1. 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: $\mathrm{Net} \mathrm{Sales}=\mathrm{Gross} \mathrm{Sales}-\mathrm{Sales} \mathrm{Returns} \& \mathrm{Allowances}-\mathrm{Sales} \mathrm{Discounts}$.
2. 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.
3. 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.
4. 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.
5. 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.