On 1 November 2014, Everett Janitorial Supply sold inventory for $5 000, FOB destination, 2/10, n/30. The inventory cost $3 200. Everett paid transportation costs of $100. On 6 November 2014, inventory of $1 000 from the 1 November sale was returned. The returned inventory had cost $600. Everett received payment for the balance of the sale on 10 November 2014. If this were the only sales transaction of the period, what amount of Net sales revenue would be shown on the income statement? All figures include GST.

Question

Quizplus · Accepted Answer

Net sales revenue is calculated as the total sales minus returns and discounts. The original sale was $5,000, and $1,000 was returned, leaving $4,000. A 2% discount is applied to the remaining $4,000 because payment was made within 10 days, resulting in a discount of $80. Therefore, net sales revenue is $4,000 - $80 = $3,920. However, since the figures include GST, the net sales revenue excluding GST is $3,920 / 1.1 = $3,563.64.

On 1 November 2014, Everett Janitorial Supply Sold Inventory for $5