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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
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 1st quarter and $40,000 in the 2nd quarter. 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 1st quarter 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 an 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
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