Question

Use the information below for Nuthatch Corporation to answer the question that follow. 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.$295,200

c.$276,500

d.$280,000

Answer 1

	Month	September	October	November
	Sales	$       2,60,000.00	$ 3,75,000.00	$   4,00,000.00
	Cash Sales(30%)	$          78,000.00	$ 1,12,500.00	$   1,20,000.00
	Credit Sales(70%)	$       1,82,000.00	$ 2,62,500.00	$   2,80,000.00
	Nuthatch Corporation
	Schedule of expected cash collection
	Month	September	October	November
Ans (C )	Cash Sales	$          78,000.00	$ 1,12,500.00	$   1,20,000.00
	Credit sales of September	$       1,45,600.00	$     36,400.00
	Credit Sales of October		$ 2,10,000.00	$      52,500.00
	Credit Sales of November			$   2,24,000.00
	Total	$       2,23,600.00	$ 3,58,900.00	$   3,96,500.00
	Cash collected in November from accounts receivable=($52500+$224000)=	$ 2,76,500.00
	Credit sales of October	($262500*20%)=	$     52,500.00
	Credit Sales of November	($280000*80%)=	$ 2,24,000.00
	Total cash collected in November for accounts Receivable		$ 2,76,500.00	(Ans C )