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 October from accounts receivable are estimated to be
A)$246,400
B)$262,500
C)$210,000
D)$294,500

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 October from accounts receivable are estimated to be
A)$246,400
B)$262,500
C)$210,000
D)$294,500

Quizplus · Accepted Answer

October cash collections from accounts receivable are estimated to be $246,400. This is calculated as follows:September sales: $260,000 x 30% = $78,000October sales: $375,000 x 30% = $112,500Total sales on account: $78,000 + $112,500 = $190,500Collections in October from September sales: $78,000 x 80% = $62,400Collections in October from October sales: $112,500 x 80% = $90,000Total collections in October: $62,400 + $90,000 = $246,400

Nuthatch Corporation Began Its Operations on September 1 of the Current