False Value Hardware began 2013 with $31,600 in its allowance for sales returns account. During the year, it had $740,000 in sales and $700,000 in cash collections from customers. False Value estimates 4% of sales will be returned, which is $29,600. Customers returned $23,000 worth of merchandise for credit. False Value's net sales for 2013 would be $710,400.

1. False Value Hardware began 2013 with a credit balance of $31,600 in the allowance for sales
returns account. Sales and cash collections from customers during the year were $740,000 and
$700,000, respectively. False Value estimates that 4% of all sales will be returned. During 2013,
customers returned merchandise for credit of $23,000 to their accounts.
False Value Hardware began 2013 with a credit balance of $31,600 in the allowance for sales
returns account. Sales and cash collections from customers during the year were $740,000 and
$700,000, respectively. False Value estimates that 4% of all sales will be returned. During 2013,
customers returned merchandise for credit of $23,000 to their accounts.
False Value's 2013 income statement would report net sales of:
Solution
Solution:
Net Sales = Sales - Allowance for Sales Returns
Net Sales = 740,000 - (740,000*4%)
= 740,000 - 29,600
= 710,400.
Net Sales = $710,400.