Nuthatch Corporation Began Its Operations on September 1 of the Current

question 147

Multiple Choice

Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $260,000, $375,000, and $400,000, respectively, for September, October, and November. 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 in October from accounts receivable are:

• A) $246,400
• B) $262,500
• C) $210,000
• D) $294,500

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Definitions:

Specified Price

A predetermined price set in a contract or agreement, often related to sales or financial instruments.

Perfect-Hedging

A risk management strategy that completely eliminates the risk associated with an investment by taking an equal but opposite position in the derivatives market.

Hedging

A risk management strategy used to offset potential losses or gains in an investment by taking an opposite position in a related asset.

Price Changes

Variations in the cost of goods and services over time, influenced by factors such as inflation, supply, and demand.