# For the fiscal year, sales were $5,280,000, sales discounts were $100,000, sales returns and...

## Question:

For the fiscal year, sales were $5,280,000, sales discounts were $100,000, sales returns and allowances were $75,000, and the cost of the merchandise sold was $3,000,000.

a. What was the amount of net sales?

b. What was the amount of gross profit?

## Net Sales and Gross Profit:

Financial statements are prepared annually to know the performance of the business. Net sales and gross profit are important financial indicators of the business. Increasing net sales suggests growth of the business and a high gross profit margin indicates that the business has a good earning capacity.

## Answer and Explanation: 1

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View this answer**Computation of net sales**

Amount | |
---|---|

Gross Sales | $5,280,000 |

Less: Sales Discounts | $100,000 |

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Chapter 9 / Lesson 7Understand the meaning of gross profit in accounting. Discover the formula for calculating gross profit and explore some examples of gross profit calculation.

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