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 $238,000, $302,000, 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:___________

a. $248,000
b. $138,880
c. $173,600
d. $297,600

Answer 1

Answer:

b. $138,880

Explanation:

Calculation to determine what The cash collections expected in September from accounts receivable are estimated to be:

First step is to calculate

(Cash) Sept sales=($248,000*30%)

(Cash) Sept sales=$74,400

Now let calculate September Expected Cash collections

(Credit) Sept sales=($248,000- $74,400)*80%

(Credit) Sept sales=$173,600*80%

(Credit) Sept sales=$138,880

Therefore The cash collections expected in September from accounts receivable are estimated to be:$138,880