Question

Gross billings for merchandise sold by Lang Company to its customers last year amounted to $12,520,000; sales returns and allowances were $270,000, sales discounts were $75,000, and freight-out was $140,000. Net sales last year for Lang Company were
a. $12,720,000.
b. $12,275,000.
c. $12,175,000.
d. None of the above.

Answer 1

Answer:

c. $12,175,000.

Explanation:

Given: Merchandise sold by Lang company= $12520000.

           Sales return and allowances= $270000.

           Discount= $140000.

While calculating net sales, freight out charges is not included as it an selling expense and it should be included while calculating Gross profit of the company.

Here, we have to find the last year net sales for Lang company.

∴ $Net sales= sales\ revenue- (sales\ returns\ and\ allowances + sales\ discount)$

⇒ Net sales = $12520000-(270000 + 75000) = 12520000 - 345000$

∴Net sales= $\ 12175000$