Net sales is calculated by subtracting sales returns and allowances and sales discounts from sales. Suppose Music Suppliers, Inc., sells merchandise worth $116,500 during June and, in conjunction with these sales, handles $9,300 in returns and allowances and $1,200 in sales discounts. The company's net sales for June equal $106,000.
Music Suppliers, Inc. Calculation of Net Sales For the Month Ended June 30, 20X3
| Sales | | $116,500
| Less: Sales Returns and Allowances | $9,300 |
| Sales Discounts | 1,200 | 10,500
| Net Sales | | $106,000