Smithson Products sells shoes and accessories to retail stores. Gross sales in 2011 were $1,500,250 (Smithson’s list price) on terms 4/10, n/30. Customers paid for $1,200,000 (Smithson’s list price) of the merchandise within the discount period and the remaining $300,250 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.