Mike’s Book Bazaar operates a mail-order business that sells books for avid readers. It had sales of $600,000 in September. Because Mike’s Book Bazaar is in the mail-order business, all sales are made on account. The company expects a 20 percent drop in sales for October. The balance in the Accounts Receivable account on September 30 was $90,000 and is budgeted to be $55,000 as of October 31.

Requirements:

1. Calculate the cash collections from accounts receivable that Mike’s Book Bazaar expects during October.
2. Analyze the factors that could contribute to a decline in sales in October for Mike’s Book Bazaar.