ACCOUNTING-TechCo Ltd is a retail distributor for MZB-33 computer hardware units

Assignment 2 – Cash budgetTechCo Ltd is a retail distributor for MZB-33 computer hardware units. Sales forecasts for the first sixmonths of 2014 are as follows:UnitsDollarsJanuary130390,000February120360,000March110330,000April90270,000May100300,000June125375,000Total6752,025,000Total sales consist of 25% cash sales, 30% credit cards sales and 45% sales on account. The cash salesand cash from credit cards sales are received in the month of sale. Credit card sales are subject to a4% discount. The cash receipts for sales on account are 70% in the month following the sale and 28%in the second month after the sale. The remaining 2% are estimated to be uncollectable.TechCo’s month end inventory requirement for computer hardware units is 30% of the next month’ssales. The purchase price is $1800 per unit. Approximately 60% of the purchases in a month are paidin that month and the rest paid in the following month.Selling and administration expenses are equal to 10% of the current month’s sales, including 00of depreciation. These expenses are paid as incurred.Required:1. What are the four elements of the budgeting cycle? (8 marks)2. Prepare a schedule of cash collections for April 2014. (13 marks)3. Prepare the budgets for purchases in units and in dollars for the months of March and April.(16 marks)4. Prepare a schedule of cash payments for April 2014. (12 marks)5. Prepare a cash budget for April 2014, assuming the cash balance as of 1 April is $10,000.(16 marks)10 marks for clearly written and presented answers. Word limit: 500 words.TOTAL: 75 marks.

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