How would figure out the amount of gross sales

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Crown Crafts, Inc., produces children's products such as infant and toddler bedding, bibs, soft goods, and accessories. Major customers include Wal-Mart and Target. A footnote to the company's 2011 financial statements states that it records sales when goods are shipped to customers, and these sales are reported net of allowances for estimated returns and allowances. The first line of Crown Crafts' income statement was (in thousands) "Net sales ... $89,971."

Problem 1: Suppose customer returns in 2011 were 2.5% of gross sales and sales allowances were 1.5% of gross sales. Assume that the company also gave customers cash discounts of $1,240,000. How would you figure out the amount of gross sales. Assume the gross method for accounting for cash discounts. Round to the nearest thousand.

Problem 2: Crown Crafts had only one line for net sales on its income statement. How would you be more detailed in the presentation of sales, beginning with gross sales and ending with net sales

Reference no: EM132716016

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