Benjamin Corporation began its operations on September 1 of the current year.Budgeted sales for the first three months of business are $250,000, $300,000, and $420,000, respectively, for September, October, and November.The company expects to sell 20% of its merchandise for cash.Of sales on account, 70% are expected to be collected in the month of the sale, 25% in the month following the sale, and the remainder in the following month. The cash collections from accounts receivable in September are:
A) $175,000.
B) $140,000.
C) $190,000.
D) $168,000.

Question

Quizplus · Accepted Answer

For September, the total sales are $250,000. Cash sales (20% of total sales) are $50,000 ($250,000 * 20%). Sales on account are $200,000 ($250,000 - $50,000). Of the sales on account, 70% are expected to be collected in the month of the sale, which amounts to $140,000 ($200,000 * 70%). Therefore, the total cash collections from accounts receivable in September are $140,000.

Benjamin Corporation Began Its Operations on September 1 of the Current