A bakery had gross sales of $275,000, sales discounts of $2,500 and returns and allowances of $2,000. What are its net sales?

1. Net sales is what is left after deducting sales discounts and returns and allowances from gross sales. 2. Start with gross sales of $275,000. 3. Add the two deductions: $2,500 of sales discounts plus $2,000 of returns and allowances equals $4,500. 4. Subtract: $275,000 minus $4,500 equals $270,500. 5. So net sales are $270,500. 6. Deducting only one of the two items gives $272,500, which is the trap set for a reader who stops after the discounts. 7. Adding the deductions instead of subtracting them gives $279,500, which would make returned goods increase sales. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.5 The Income Statement_