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  1. This answer was edited.

    Sure, John, firstly I would like to explain the meaning of net credit sales before moving onto the formula of net credit sales. To make the concept easy and transparent, I would like to add a practical example for better understanding.  Net Credit Sales Credit sales refer to the total value of salesRead more

    Sure, John, firstly I would like to explain the meaning of net credit sales before moving onto the formula of net credit sales. To make the concept easy and transparent, I would like to add a practical example for better understanding. 

    Net Credit Sales

    Credit sales refer to the total value of sales which an organization (or) company makes on credit. If the company offers any discount to its customers on the credit sale of goods (or) if sales returns occur, then such amounts must be deducted from the total value of credit sales to arrive at Net credit sales figure.

    In simple terms, net credit sales refer to the total revenue generated by the company when it sells goods and services to its customers on credit, reducing the amount of sales allowance and sales return from the total credit sales.

    Net Credit Sales Formula

    Net Credit Sales = Total Credit Sales – Sales Returns – Discount on Sales

    Example-

    Apple Inc furnishes you the following sales information. Calculate the value of Net credit sales.

    ParticularsAmount
    Total Sales4,50,000
    Cash Sales1,50,000
    Credit Sales3,00,000
    Goods Returned by Customers1,00,000
    Sales Allowance/Discount60,000

    Net Credit Sales = Credit Sales – Sales Returns – Discount allowed on Sales

    = 3,00,000 – 1,00,000 – 60,000

    = 1,40,000

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