Merchandise costing $2,000 is sold for $3,000 on terms 2/30, n/60. If the customer pays within the discount period, what amount will be reported on the income statement as net sales and as gross profit?

If merchandise costing $2,000 is sold for $3,000 on terms 2/30, n/60. If the customer pays within the discount period, what amount will be reported on the income statement as net sales and as gross profit will be:

Calculation for Net sales using this formula

Net Sales= Sales - Discount

Let plug in the formula

Net sales=$3,000 - ($3,000×2%)

Net sales=$3,000 - $60

Net sales=$2,940

Calculation for Gross profit using this formula

Gross profit=Net sales-Merchandize

Let plug in the formula

Gross profit=$2,940-$2,000

Gross profit=$940

Inconclusion if merchandise costing $2,000 is sold for $3,000 on terms 2/30, n/60. If the customer pays within the discount period, what amount will be reported on the income statement as net sales and as gross profit will be:

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The amount that will be reported on the income statement as net sales is $2,940 and as gross profit is $940.

Explanation:

Given:

Merchandise costing $2,000 is sold for $3,000 on terms 2/30, n/60.

If the customer pays within the discount period.

Now, to find the amount reported on the income statement as net sales and as gross profit.

Cost of merchandise = $2,000.

As, merchandise sold for $3,000.

So, to get the net sales we deduct the discount:

Merchandise on terms 2/30, n/60.

Thus, the net sales is $2,940.

Now, to get the gross profit we subtract cost of merchandise from net sales:

Hence, gross profit is $940.

Therefore, the amount that will be reported on the income statement as net sales is $2,940 and as gross profit is $940.

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