How Do You Calculate Net Credit Sales?

How Do You Calculate Net Credit Sales?

Accounting Tools from CPA Steven Bragg indicates that the formula for net credit sales is sales on credit in a given period minus sales returns and sales allowances. If a company has $100,000 in net credit sales but experiences $34,000 in returns and allowances, its net credit sales are $66,000.

Net credit sales do not include sales that are paid for immediately with cash, according to Accounting Tools. Credit sales occur when a buyer purchases items on account. When companies accept returned items or offer customers special discounts on their purchases, the credit sales amount is offset by the lost revenue. A significant difference between sales on credit and net credit sales indicates a high amount of returns and allowances.