Total gross sales for the period include the following:

Credit card sales (discount 3%) $ 9,400

Sales on account (2/15, n/60) $ 12,000

Sales returns related to sales on account were $650. All returns were made before payment. One-half of the remaining sales on account were paid within the discount period. The company treats all discounts and returns as contra-revenues. What amount will be reported on the income statement as net sales?

The $20,354.50 will be reported on the income statement as net sales

Explanation:

The computation of the net sales is shown below:

= Total sales - discount on credit card sales - sales discount - sales return

where,

total sales = Credit card sales + sales on account

= $9,400 + $12,000

= $21,400

Discount on credit card sales = Credit card sales * discount

= $9,400 * 3%

= $282

Sales discount = (Sales on account - sales return * 0.5 (Half payment) * 2%)

= ($12,000 - $650) * 0.5 * 2%

= $113.50

And, the sales return = $650

Now put these values to the above formula,

So the values equal to

= $21,400 - $282 - $113.50 - $650

= $20,354.50