Net sales is calculated by subtracting sales returns and allowances and sales discounts from sales. Suppose Music Suppliers, Inc., sells merchandise worth $116,500 during June and, in conjunction with these sales, handles $9,300 in returns and allowances and $1,200 in sales discounts. The company's net sales for June equal $106,000.
Music Suppliers, Inc. Calculation of Net Sales For the Month Ended June 30, 20X3
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Sales
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$116,500
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Less: Sales Returns and Allowances
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$9,300
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Sales Discounts
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1,200
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10,500
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Net Sales
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$106,000
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