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. Refer to the information provided for Benjamin Corporation. 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

First, we need to calculate the total sales on account for September:
$250,000 x 80% = $200,000
Of this amount, 70% is expected to be collected in September, which is $200,000 x 70% = $140,000. Therefore, the cash collections from accounts receivable in September are $140,000.

Benjamin Corporation Began Its Operations on September 1 of the Current