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:

Rent-a-Wreck Industry

The business sector that specializes in renting out older, often pre-owned vehicles at reduced rates compared to standard rental services.

Economic Profits

The difference between total revenues and total costs, including both explicit and implicit costs.

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information, which leads to firms being price takers.

Perfectly Competitive Firm

A business that operates in a market where there are many buyers and sellers, all selling identical products, with no single entity being able to influence the market price.