Net Sales
Categories: Accounting, Company Management
Outside the stadium, you sold 4,000 t-shirts at $20 each to make 80 grand in gross sales. But unfortunately, quite of few of the buyers who thought they were XXLs were, in fact, XXXXXLs. So they returned the shirts, albeit some a tad stretched out.
You had to give them their money back. Luckily, it was only 100 people who returned them. So that subtracted 2 grand from your gross sales.
You then had a ton fo people pay with a credit card (you chose to account for a sale as an after-credit-card-charge cost), and because you weren't a regular merchant vendor, processing those cards cost you a small fortune: 3 grand. So you had 80 grand in gross sales and then 5 grand in selling costs, or returns, to give you net sales of 75 grand for the day.