Diane’s Shoe Emporium operates a mail-order business that sells shoes for busy professionals. It had sales of $500,000 in June. Because Diane’s Shoe Emporium is in the mail-order business, all sales are made on account. The company expects a 25 percent drop in sales for July. The balance in the Accounts Receivable account on June 30 was $80,000 and is budgeted to be $50,000 as of July 31.

Requirements:

1. Determine the amount of cash Diane’s Shoe Emporium expects to collect from accounts receivable during July.
2. Discuss whether it is reasonable to expect a decline in sales in July for a business like Diane’s Shoe Emporium.