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 $260,000, $375,000, and $400,000, 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
A)$223,600
B)$145,600
C)$182,000
D)$168,000

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 $260,000, $375,000, and $400,000, 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
A)$223,600
B)$145,600
C)$182,000
D)$168,000

Quizplus · Accepted Answer

For September, the cash collections from accounts receivable are only from sales on account, as the cash sales are not part of accounts receivable collections. The total sales for September are $260,000. Cash sales (30% of total sales) are $260,000 * 30% = $78,000, leaving $182,000 ($260,000 - $78,000) as sales on account. Of these sales on account, 80% are expected to be collected in the same month (September), which amounts to $182,000 * 80% = $145,600.

Nuthatch Corporation Began Its Operations on September 1 of the Current