Gross Sales and Net Sales
| General Journal - Merchandise return example | |||
|---|---|---|---|
| Date | Description of entry | Debit | Credit |
| 8-7 | Sales Returns and Allowances | 20.00 | |
| Accounts Receivable | 20.00 | ||
| Full credit for customer return of merchandise purchased on account. | |||
| 8-7 | Inventory | 15.00 | |
| Cost of Goods Sold | 15.00 | ||
| Restore returned merchandise to inventory. | |||
Gross sales are the sum of all sales during a time period. Net sales are gross sales minus sales returns, sales allowances, and sales discounts. Gross sales do not normally appear on an income statement. The sales figures reported on an income statement are net sales.
- sales returns are refunds to customers for returned merchandise / credit notes
- debit notes
- sales journal entries non-current, current batch processed transactions predictive analytics in strategic management/administration/governance research metaframeworks
- sales allowances are reductions in sales price for merchandise with minor defects, the allowance agreed upon after the customer has purchased the merchandise (see also credit note)
- sales discounts allowed are reduced payments from the customer based on invoice payment terms such as 2/10, n/30 (2% discount if paid within 10 days, net invoice total due in 30 days)
- interest received for amounts in arrears
- inc/exc amounts capital goods&services, non-capital goods&services input valued added tax, with cost of non-capital goods sold
input vat - output vat
sales of portfolio items and capital gains taxes
Sales Returns and Allowances and Sales Discounts are contra-revenue accounts.
In a survey of nearly 200 senior marketing managers, 70 percent responded that they found the "sales total" metric very useful.
| General Journal - Sales discount example | |||
|---|---|---|---|
| Date | Description of entry | Debit | Credit |
| 9-1 | Accounts Receivable (Customer A) | 500.00 | |
| Sales | 500.00 | ||
| Merchandise sale on account, terms 2/10, n/30. | |||
| 9-7 | Cash | 490.00 | |
| Sales Discounts | 10.00 | ||
| Accounts Receivable (Customer A) | 500.00 | ||
| A/R paid by Customer A, taking a 2% discount. | |||
Revenue or Sales reported on the income statement are net sales after deducting Sales Returns and Allowances and Sales Discounts.
| Revenue: | ||
| Sales | $2,000.00 | |
| Less Sales returns and allowances | $20.00 | |
| Sales discounts | $10.00 | $30.00 |
| Net sales | $1,970.00 |
Read more about this topic: Sales (accounting)
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