Novelty Goods operates a mail-order business that sells unique gifts and novelties. It had sales of $350,000 in July. Because Novelty Goods is in the mail-order business, all sales are made on account. The company expects a 30 percent drop in sales for August. The balance in the Accounts Receivable account on July 31 was $55,000 and is budgeted to be $38,000 as of August 31.

Requirements:

1. Determine the amount of cash collections from accounts receivable expected during August for Novelty Goods.
2. Evaluate whether the decline in sales for August is consistent with industry patterns for Novelty Goods.