Page 203 - Accounting Information Systems

174 PART II Transaction Cycles and Business Processes

Accounts Receivable, Inventory Control, and General Ledger Departments
Upon receipt of sales documents from the billing department, the AR and inventory control clerks
update their respective subsidiary ledgers. Periodically they prepare journal vouchers and account summa-
ries, which they send to the general ledger department for reconciliation and posting to the control accounts.

SALES RETURN PROCEDURES
Figure 4-13 illustrates the procedures and documents used for processing sales returns.

Receiving Department
The sales return process begins in the receiving department, where personnel receive, count, inspect for
damage, and send returned products to the warehouse. The receiving clerk prepares a return slip, which is
forwarded to the sales department for processing.
Sales Department
Upon receipt of the return slip, the clerk prepares a credit memo. Depending on the materiality and circum-
stance of the return, company policy will dictate whether credit department approval (not shown) is required.

Processing the Credit Memo
The objective of the sales return system is to reverse the effects of the original sales transaction. Billing
records a contra entry into sales return, and allowance journal inventory control debits the inventory
records to reflect the return of goods. The AR clerk credits the customer account. All departments periodi-
cally prepare journal vouchers and account summaries, which are then sent to the general ledger for rec-
onciliation and posting to the control accounts.

CASH RECEIPTS PROCEDURES
Figure 4-14 presents a system flowchart depicting the cash receipts procedures.

Mail Room
Customer payments and remittance advices arrive at the mail room, where the envelopes are opened. The
checks are sent to the cashier in the cash receipts department, and the remittance advices are sent to the
AR department.

Cash Receipts
The cashier records the checks in the cash receipts journal and promptly sends them to the bank, accom-
panied by two copies of the deposit slip. Periodically, the employee prepares a journal voucher and sends
it to the general ledger department.
Accounts Receivable
The AR department uses the remittance advices to reduce the customers’ account balances consistent with
the amount paid. The AR clerk prepares a summary of changes in account balances, which is sent to the
general ledger department.

General Ledger Department
Upon receipt of the journal voucher and account summary from cash receipts and AR, respectively, the
general ledger clerk reconciles the information and posts to the control accounts.
Controller’s Office
Because cash is a liquid asset and subject to misappropriation, additional controls are necessary. In this
case, someone from the controller’s office periodically performs a bank reconciliation by comparing de-
posit slips returned from the bank, account summaries used to post to the accounts, and journal vouchers.