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.