Answer:
Option (b) is correct.
Explanation:
Given that,
Budgeted sales in September = $260,000
Budgeted sales in October = $375,000
Budgeted sales in November = $400,000
Percent of merchandise sells for cash = 30%
Percent of merchandise sells on account = 70%
Out of the credit sales,
80% are expected to be collected in the month of the sale.
20% in the month following the sale.
Therefore, the cash collections in September from accounts receivable will include only 80% of the credit sales in September as Nuthatch corporations starts its operation on September 1, hence there will be no sales in August.
Cash Collections From Accounts Receivables;
= 80% of the credit sales in September
= 0.8 × (70% × $260,000)
= 0.8 × $182,000
= $145,600
