Question

During the months of January and February, Hancock Corporation sold goods to three customers. The sequence of events was as follows:

Jan. 6 Sold goods for $1,400 to S. Green and billed that amount subject to terms 2/10, n/30.
6 Sold goods to M. Munoz for $500 and billed that amount subject to terms 2/10, n/30.
14 Collected cash due from S. Green.
Feb. 2 Collected cash due from M. Munoz.
28 Sold goods for $490 to R. Reynolds and billed that amount subject to terms 2/10, n/45.

Required:
Assuming that Sales Discounts is treated as a contra-revenue, compute net sales for the two months ended February 28.

Answer 1

Answer:

$2,362

Explanation:

The computation of the net sales for the two months is shown below:

= Sale value of goods to S green + Sale value of goods to M Munoz + Sale value of goods to R. Reynolds - sales discounts

= $1,400 + $500 + $490 - $28

= $2,362

The sales discount is

= Sale value of goods to S green × discount percentage

= $1,400 × 2%

= $28