Nuthatch Corporation Began Its Operations on September 1 of the Current

question 27

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 September from accounts receivable are:

• A) $223,600
• B) $145,600
• C) $182,000
• D) $168,000

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Definitions:

Fixture

A piece of property that was originally moveable but has become attached to real property in such a way that it is legally considered part of the real property.

Subrogation

is a legal doctrine allowing one party (usually an insurer) to step into the shoes of another party to pursue rights or claims against a third party, often to recover amounts paid out in a claim.

Surety

A form of financial guarantee, wherein one party (the surety) agrees to take on the financial obligations of another if they default.

Reimbursement

The act of compensating someone for an expense incurred, often associated with business expenses or insurance claims.