Anna’s Fitness Apparel operates a mail-order business that sells athletic wear. It had sales of $550,000 in April. Because Anna’s Fitness Apparel is in the mail-order business, all sales are made on account. The company expects a 15 percent drop in sales for May. The balance in the Accounts Receivable account on April 30 was $75,000 and is budgeted to be $45,000 as of May 31.

Requirements:

1. Calculate the amount of cash collections from accounts receivable that Anna’s Fitness Apparel expects during May.
2. Evaluate the likelihood of a sales decline in May for Anna’s Fitness Apparel given the industry trends.