Financial Information Analysis
What is the amount of net sales on the income statement?
A. $127,000
Answer:
Total Net Sales: $127,000
Explanation:
Income Statement
Sales: $140,000
Sales Return and Allowance: -$10,000
Sales Discounts: -$3,000
Net Sales: $127,000
Cost of goods sold: -$100,000
Gross Profit: $27,000
Operating Expenses: -$56,000
Net Income BEFORE Taxes: -$29,000
When analyzing financial information, it is crucial to understand the components of the income statement. In this case, we are looking at the amount of net sales on the income statement.
The net sales on the income statement can be calculated by subtracting sales returns and allowances as well as sales discounts from the total sales revenue. In this scenario, the total sales revenue is $140,000, sales returns and allowances are $10,000, and sales discounts are $3,000.
By subtracting the sales returns and allowances of $10,000 and sales discounts of $3,000 from the total sales revenue of $140,000, we arrive at the net sales amount of $127,000. This is an essential figure as it represents the actual revenue generated from sales after accounting for returns and discounts.
Understanding the net sales amount is crucial for evaluating the company's performance and making informed business decisions based on accurate financial data.