Dorman Co. sold merchandise to Smith Co. on account, $18,000, terms 2/15, net 45. The cost of the merchandise sold is $15,500. Dorman Co. issued a credit memo for $1,750 for merchandise returned that originally cost $1,400. The Smith Co. paid the invoice within the discount period. What is amount of net sales from the above transactions?

Question

Quizplus · Accepted Answer

Net sales = Total sales - Sales discounts + Sales returns
Total sales = $18,000
Sales discounts = 2% of $18,000 = $360
Sales returns = $1,400 - $1,750 = -$350 (negative because it's a return)
Net sales = $18,000 - $360 - (-$350) = $18,000 - $360 + $350 = $15,990
Since Smith Co. paid within the discount period, they would get a discount of 2% on the total invoice amount, which is $360. So, the net amount received by Dorman Co. would be $15,990 - $360 = $15,630.

Dorman Co Sold Merchandise to Smith Co