Pete’s Outdoor Equipment operates a mail-order business that sells camping gear. It had sales of $700,000 in August. Because Pete’s Outdoor Equipment is in the mail-order business, all sales are made on account. The company expects a 40 percent drop in sales for September. The balance in the Accounts Receivable account on August 31 was $100,000 and is budgeted to be $60,000 as of September 30.

Requirements:

1. Determine the expected cash collections from accounts receivable during September for Pete’s Outdoor Equipment.
2. Analyze the reasons for a potential decline in sales for Pete’s Outdoor Equipment in September.