Net Credit Sales Formula

The Net Credit Sales Formula is used to calculate Credits Sales or Sales On Credit / Account. The formula is shown below:

Net Credit Sales = Credit Sales - (Sales Returns & Allowances + Sales Discounts)

Here sales returns and sales allowances are Contra Revenue Accounts.

You Can Also Study, “How To Calculate Credit Sales”

Example, if Total Sales = Rs. 500000, Cash Sales = Rs. 400000, Sales Returns = Rs. 3000 and Sales Allowances = Rs. 1000, then what is Net Credit Sales?

We know Credit Sales = Total Sales - Cash Sales = 500000 - 400000 = Rs. 100000

And

Net Credit Sales = Credit Sales - Sales Returns - Sales Allowances

                           =   100000       -     3000           -       1000

                           = Rs. 97000

Do You Know?

Net Credit Sales or Total Net Credit Sales are also called "Net Accounts Receivable Sales" as it shows that sales which are made on account from Accounts Receivable from whom the company should receive the total amount of goods sold within the specified time period.