Haverford Company has the following information related to preparing the first quarter 2021 Cash Budget.

a.Budgeted Sales and Budgeted Purchases for 2021 are detailed below:

Sales

Material Purchases

4th Quarter 2020

$310,000

$180,000

1st Quarter 2021

$575,000

$245,000

2nd Quarter 2021

$525,000

$325,000

3rd Quarter 2021

$595,000

$360,000

4th Quarter 2021

$450,000

$220,000

The company collects 35% of sales immediately.The remaining 65% is collected in the quarter following the sale.In addition 20% of purchases are paid for immediately.The remainder are paid for in the quarter following the sale.

b.Labor costs are fixed at $58,000 per quarter.

c. Selling and Administrative expenses are $80,000 per quarter plus 10% of sales.Included in the $80,000 is depreciation of $15,000.

d. Haverford has historically paid $6,000 in cash dividends each quarter.

e. The company plans to purchase new equipment in 2021 using cash on hand.The equipment will cost $100,000.The company will pay $60,000 in the 1stquarter and $40,000 in the 2nd quarter.

f. The cash account began 2021 with a balance of $22,000.The company must maintain a minimum balance of $18,000.

Required:

1. Prepare the Cash Budget with supporting schedules for cash collections and cash disbursements for the FIRST QUARTER ONLY.19 pts
2. Do you recommend the equipment purchase?Write a email to the president of the company with your recommendations. 5 pts.
3. Calculate the 12/31/21 ending balance of Accounts Receivable and Accounts Payable. 4 pts