In real life, income tax expense would be reported between net other revenues and expenses and Net Income. It is excluded in this illustration and in the textbook for simplicity.

• Gross Sales P500,000
• Sales Return & allow. P5,000
• Sales Discounts 3,000
• Cost of Merchandise Sold 294,000
• Selling Expenses 50,000
• Admin Expense 45,000
• Interest Revenue 1,500
• Interest Expense 700

Calculate Net Sales if, Sales Returns and Allowances are P25,000, Sales Discounts are P15,000, Cost of Merchandise Sold is P620,000 and Gross Profit is P185,000.