Sales Revenue Minus Sales Returns And Allowances And Sales Discounts Equals What?

Sales Revenue Minus Sales Returns And Allowances And Sales Discounts Equals / Sales Less Sales Discounts Less Sales Returns And Allowances Equals Multiple Choice Question (MCQ) / Net Sales = Gross Sales - Sales Allowances - Sales Returns - Sales Discounts / Sales Revenue Equals To What 

Sales Revenue Minus Sales Returns, Sales Allowances And Sales Discounts Equals To Net Sales.

The formula to calculate Net Sales is shown below:

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

Actually, sales allowances, returns and discounts are the Contra Revenue Accounts which are deducted from Gross or Total Sales in order to calculate net sales for the period.

For example, Mr. A, as a sole proprietor, sold goods (5 chairs of Rs. 10000 each) worth Rs. 50000 to Mr. B on account. Later on Mr. B found that one chair is defective, one has some minor defects. Mr. B returned one chair of Rs. 10000 which is accepted by Mr. A. Mr. A gave sales discount of 2% on sales price of 3 chairs to Mr. B. Mr. A, lowered the price of one minor defective chair to Rs. 9200 and Mr. B accepted it. Calculate Net Sales.

                            Here Sales Discount On 3 Chairs’s Sales Price = 5% X 30000 = Rs. 1500

                                          Sales Returns = 1 chair returned = Rs. 10000

                                           Sales Allowances = Rs. 800

In Equation Form or in the form of formula, we have:

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

                                            = 50000 - 800 - 10000 - 1500

                          Net Sales = Rs. 37700