*Problem 10.44A a Rotech Co. began operations in January 2019. The information below is for Rotech 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 $34,600 15,100 24,900 29,200 12,200 15,000 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 $30,200. Other information: 1. Sales (made evenly throughout the quarter) Quarter 1 Quarter 2 Quarter 3 (actual (forecast) (forecast) $610,000 401,200 803,800 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) $301,110 The gross margin ratio is constant at 40% Cash payments for purchases are as follows: 50% in the quarter of purchase and 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 $149,100 in February 2019. The estimated useful life of this equipment is 10 years; it has no estimated scrap value. 4. Dividends of $20,200 are declared on the last day of each quarter and are paid at the end of the next month. 5. The cash balance in the bank at the end of the first quarter is $45,400. (a) Prepare a cash budget for Rotech Co. for the second quarter of 2020. ROTECH CO. Cash Budget For the Second Quarter Ended June 30, 2020