Nuthatch Corporation began its operations on September 1 of

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 $232,000, $307,000, and $402,000, 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)$278,400

b)$129,920

c)$162,400

d)$232,000

Solution

Hence cash collections expected in September from accounts receivable=($162400*80%)

which is equal to

=$129920.