Special Delivery operates a mail-order business that sells clothes designed for frequent travelers. It had sales of \($400,000\) in December. Because Special Delivery is in the mail-order business, all sales are made on account. The company expects a 25 percent drop in sales for January. The balance in the Accounts Receivable account on December 31 was \($80,000\) and is budgeted to be \($60,000\) as of January 31. Special Delivery normally collects accounts receivable in the month following the month of sale.

Required

a. Determine the amount of cash Special Delivery expects to collect from accounts receivable during January.

b. Is it reasonable to assume that sales will decline in January for this type of business? Why or why not?