John Hay

What is the formula for net credit sales?


1 Answer

  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 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


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

    Particulars Amount
    Total Sales 4,50,000
    Cash Sales 1,50,000
    Credit Sales 3,00,000
    Goods Returned by Customers 1,00,000
    Sales Allowance/Discount 60,000

    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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