Sorry, you do not have permission to ask a question, You must login to ask a question.


Forgot Password?

Need An Account, Sign Up Here

Please briefly explain why you feel this question should be reported.

Please briefly explain why you feel this answer should be reported.

Please briefly explain why you feel this user should be reported.

Sign InSign Up

AccountingQA

AccountingQA Logo AccountingQA Logo

AccountingQA Navigation

  • Home
  • Ask Questions
  • Write Answers
  • Explore
  • FAQs
Search
Ask A Question

Mobile menu

Close
Ask a Question
  • Home
  • Questions
    • Most Visited
    • Most Active
    • Trending
    • Recent
  • Follow
    • Categories
    • Users
    • Tags
  • Write an Answer
  • Badges & Points
  • Request New Category
  • Send a Suggestion
  • Search Your Accounting Question..

Bonnie
Bonnie
In: 1. Financial Accounting > Financial Statements

How to find net credit sales from balance sheet?

How to find net credit sales from balance sheet?
  • 1 1 Answer
  • 0 Followers
  • 0
Share
  • Facebook

    Related Questions

    • Is debtor an asset or liability ?
    • How are contingent assets different from contingent liabilities ?
    • What is the meaning of posting in journal entries
    • What are 5 types of journal entries?
    • Is creditor an asset or liability ?
    • PASS THE JOURNAL ENTRIES (WHICH SHOULD HAVE AT LEAST 20 TRANSACTIONS WITH GST) POST THEM INTO THE LEDGER, PREPARE A TRIAL BALANCE BY BALANCE METHOD-
    • i need 35 journal enteries there ledgers {all} trial balance psl s trading a/c With balance sheet

    You must login to add an answer.


    Forgot Password?

    Need An Account, Sign Up Here

    1 Answer

    • Voted
    • Recent
    1. Ishika Pandey ca aspirant
      2022-12-29T15:47:13+00:00Added an answer on December 29, 2022 at 3:47 pm
      This answer was edited.

      What is net credit sales?

      Net credit sales are those revenues by a business entity, less all sales returns and allowances. Immediate payment in cash is not included in net credit sales.

      Formula

       The formula for net credit sales is as follows:

      Net credit sales  = Sales on credit – Sales returns – Sales allowances

      In the balance sheet, you can find credit sales in the “short-term assets “section. It can be calculated from account receivables, bills receivables, and debtors of the balance sheet.

      Credit sales = closing debtors + receipts – opening debtors

      Steps to calculate net credit sales

      • Calculate total sales for the period
      • Subtract the Sales Returns
      • Subtract the Sales Allowances
      • Subtract the Cash Sales ( if any )

       

      Terms relevant to understand before calculation

      Sales return:  A sales return is when a customer or client returns or sends a product back to the seller. And this can happen due to various reasons, including:

      • Excess quantity ordered
      • Not upto Customer expectations
      • Shipping delays ( product arrived late )
      • Accidentally ordered an item and there can be more such reasons.

      Sales allowance: A sales allowance is a discount that a seller offers a buyer as an alternative to the buyer for returning the product.

      Because of a problem or issue with the buyer’s order or we can say that he is not satisfied with the product.

      Cash sales: Cash sales are sales in which the payment is done at once or I can say that buyer has obligation to make payment to the seller.

      Cash sales are considered to include bills, checks, credit cards, and money orders as forms of payment.

      Example

      Now after understanding the terms used in the formula let me explain to you with an example which is as follows:-

        • First, we will calculate the Total Sales for the Period:- In the month of May, Flipkart company had cash sales of Rs 80,000. The total amount in Accounts Receivables is Rs 150,000, with Rs 30,000 as the carryover from April’s receivables.
        • Since you only want to know about credit sales in the current period (September), you subtract Rs 30,000 from the total. This means that for the month of September, Flipcart Company had sales totaling Rs 200,000 (80,000 + 120,000).

       

        • Second, we will subtract the Sales Returns:- During the month of September, Flipcart Company issued Rs 20,000 in refunds, because several items were damaged during shipment, so the customer could not use them.
        • This amount would reduce the total number of cash sales if the accounts receivable balance was from a credit customer. This reduces the total sales to Rs 180,000 (Rs 200,000 in total sales – Rs 20,000 in returns).

       

        • Thirdly we will subtract the Sales Allowances:- Sales allowances are discounts offered to customers for not asking for full refunds.
        • For example, an item that had been shipped to a customer was the wrong size, but the customer told that he will agree to keep the item if the price could be adjusted. Flipcart Company issued Rs 10,000 in allowances in May.
        • After this deduction, the total sales for May are Rs 170,000 (Rs 180,000 – Rs 10,000).

       

        • Then at last there are any cash sales then subtract:- After figuring out the total number of sales for September and then subtracting the sales returns and allowances, the cash sales are deducted since you are focusing on net credit sales for the period.
        • After deducting the Rs 60,000 in cash sales, Flipcart Company has Rs 110,000 as net credit sales.

       

      Why do we need net credit sales?

      • Net Credit sales help to calculate the accounts receivable turnover ratio.

       

      • Net credit sales also indicate the amount of credit you offer to your customer.

       

      •  Net credit sale is also used to calculate other financial analysis items like days sales outstanding.
      • 0
      • Share
        Share
        • Share on Facebook
        • Share on Twitter
        • Share on LinkedIn
        • Share on WhatsApp

    Sidebar

    Question Categories

    • 1. Financial Accounting

        • Accounting Terms & Basics
        • Bank Reconciliation Statement
        • Banks & NBFCs
        • Bills of Exchange
        • Capital & Revenue Expenses
        • Consignment & Hire Purchase
        • Consolidation
        • Contingent Liabilities & Assets
        • Departments & Branches
        • Depreciation & Amortization
        • Financial Statements
        • Goodwill
        • Insurance Accounting
        • Inventory or Stock
        • Investment Accounting
        • Journal Entries
        • Ledger & Trial Balance
        • Liquidation & Amalgamation
        • Miscellaneous
        • Not for Profit Organizations
        • Partnerships
        • Ratios
        • Shares & Debentures
        • Source Documents & Vouchers
        • Subsidiary Books
    • 2. Accounting Standards

        • AS
        • IFRS
        • IndAS
    • 3. Cost & Mgmt Accounting
    • 4. Taxes & Duties

        • GST
        • Income Tax
    • 5. Audit

        • Bank Audit
        • Internal Audit
        • Miscellaneous - Audit
        • Statutory Audit
    • 6. Software & ERPs

        • Tally
    • 7. MS-Excel
    • 8. Interview & Career
    • Top Questions
    • I need 20 journal entries with ledger and trial balance?

    • Can you show 15 transactions with their journal entries, ledger, ...

    • Following is the Receipts and Payments Account of Bharti Club ...

    • Prepare Income and Expenditure Account of Youth Club from the ...

    • What is loose tools account and treatment in final accounts?

    • What is furniture purchased for office use journal entry?

    • What is mobile phone depreciation rate?

    • How to show adjustment of loose tools revalued in final ...

    • How much is depreciation on camera?

    • What is the treatment of preliminary expenses in cash flow ...

    Hot Topics

    Accounting Policies Accounting Principles Balance Sheet Bank Reconciliation Statement Bill of Exchange Branch Accounting Calls in Advance Capital Capital Expenditure Companies Act Compound Entry Consignment Creditors Current Assets Debit Balance Debtors Depreciation Difference Between Dissolution of Firm Dissolution of Partnership Drawings External Users Fictitious Assets Final Accounts Financial Statements Fixed Assets Fixed Capital Fluctuating Capital Gain Impairment Installation Interest Received in Advance Internal Users Journal Entry Ledger Loose Tools Miscellaneous Expenditure Profit Rent Rent Received in Advance Reserves Revaluation Revenue Expenditure Revenue Reserve Sacrificing Ratio Subscription Subscription Received in Advance Trial Balance Type of Account Uncalled Capital
    • Home
    • Questions
      • Most Visited
      • Most Active
      • Trending
      • Recent
    • Follow
      • Categories
      • Users
      • Tags
    • Write an Answer
    • Badges & Points
    • Request New Category
    • Send a Suggestion

    Most Helping Users

    Astha

    Astha

    • 50,251 Points
    Leader
    Simerpreet

    Simerpreet

    • 27 Points
    Curious
    AbhishekBatabyal

    AbhishekBatabyal

    • 25 Points
    Curious

    Footer

    • About Us
    • Contact Us
    • Pricing
    • Refund
    • Forum Rules & FAQs
    • Terms and Conditions
    • Privacy Policy
    • Career

    © 2021 All Rights Reserved
    Accounting Capital.