Net Credit Sales

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Net Credit Sales

Net credit sales are sales that were completed by credit minus returns, allowances, and discounts.

One way of estimating bad debt expense is to take the net credit sales and multiply it by a predetermined percentage to ascertain how much of your receivables will never be collected. To get an accurate number for credit sales, many companies first deduct the merchandise that was returned, the merchandise that was discounted because of defects, and the sales discounts that were taken.

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