10.51B (L 4) Raymond Co. began operations in January 2019. The information below is for Raymond Co. s operations for the three months from January to March (the first quarter) of 2020 Expenses for Quarter 1 Depreciation Factory overhead Income taxes Payroll Selling costs (2% commission on sales) Administrative costs $40,000 10,000 15,000 30,000 8,000 10,000 Costs are assumed to be incurred evenly throughout the year, with the exception of depreciation and income taxes. Depreciation on new assets is first taken in the quarter after the quarter in which they are purchased. Income taxes are payable in semi-annual instalments, on the first day of each six-month period, based on last year's actual taxes of $30,000. Other information: 1. Sales (made evenly throughout the quarter) Quarter 1 Quarter 2 Quarter 3 (actual) (forecast) (forecast) $400,000 400,000 800,000 Collections from sales are as follows: 50% in the quarter of sale; 45% in the following quarter, 5% uncollectible. 2. Purchases (made evenly throughout the quarter) Quarter 1 (actual) $200,000 The gross margin ratio is constant at 60%. Cash payments for purchases are as follows: 50% in the quarter of purchase: 50% in the following quarter. Merchandise purchased during a quarter would include 25% of the next quarter's forecast sales. 3. The company purchased capital equipment for $100,000 in February 2019. The estimated useful 4. Dividends of $20,000 are declared on the last day of each quarter, and are paid at the end of the 5. The cash balance in the bank at the end of the first quarter is $25,000. life of this equipment is 10 years; it has no estimated scrap value. next month. Instructions a. Prepare a cash budget for Raymond Co. for the second quarter of 2020. Show all your supporting calculations. b. List three advantages of budgeting