Nuthatch Corporation began its operations on September 1 of the current year. Bu

Question

Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business-September, October, and November-are $250,000, $308,000, and $407,000, respectively. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale. The cash collections expected in September from accounts receivable are estimated to be $300,000 $175,000 $140,000 $250,000

Explanation / Answer

Calulation of cash collections expected in september from accounts recievable: Sale of september= $250000 Cash sales= 250000*0.30= $75000 Credit sales= 250000*0.70=$175000 Amount of credit sales to be received in september= 175000*0.80=$140000 Therefore amount of cash collections expected in september from accounts recievable is $140000 So correct answer is $140000

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