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 $233,000, $316,000, and $412,000, 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 collections expected in November from accounts receivable are projected to be:

a)$274,960

b)$186,480

c)$230,720

d)$329,952

Explanation / Answer

Hence ollections expected in November from accounts receivable=(80%*$288400)+(20%*$221200)

which is equal to

=$274960.

Cash sales(30%) Credit sales(70%) September 69900 163100 October 94800 221200 November 123600 288400

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