Lucas’ Luxury Linens operates a mail-order business that sells high-end bed linens. It had sales of $650,000 in January. Because Lucas’ Luxury Linens is in the mail-order business, all sales are made on account. The company expects a 30 percent drop in sales for February. The balance in the Accounts Receivable account on January 31 was $85,000 and is budgeted to be $50,000 as of February 28.

Requirements:

1. Determine the amount of cash collections from accounts receivable expected during February for Lucas’ Luxury Linens.
2. Evaluate the impact of external economic factors on the sales decline in February for Lucas’ Luxury Linens.