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 $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 November from accounts receivable are projected to be

a.$316,400

b.$280,000

c.$276,500

d.$295,200

Explanation / Answer

Cash collections expected in November from accounts receivable =(375000*70%*20%)+(400000*70%*80%)= $276500 Option C is correct

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