Effects of Discounts on Sales and Purchases
Smithson Products sells shoes and accessories to retail stores. Gross sales in 2013 were $1,407,250 (Smithson's list price) on terms 2/10, n/30. Customers paid for $925,500 (Smithson's list price) of the merchandise within the discount period and the remaining $481,750 after the end of the discount period. Smithson records purchases and sales using the gross method to account for sales discounts.
Required:
1. Compute the amount of net sales.
$
2. Determine how much cash was collected from sales.
$