Page 245 - Accounting Information Systems

216 PART II Transaction Cycles and Business Processes

prepared, and the goods are shipped to the customer in automatically updated by crediting the customer
the same way as other sales orders. account. Both return slips are filed by billing/accounts
After receiving the sales order from the sales depart- receivable in the returned goods file for future business
ment, the billing/accounts receivable department clerk evaluation.
files it in a temporary file until the shipping notice, the
bill of lading, and the sales order or factory order have Description of Cash Receipts Procedures
arrived from the warehouse. Once the shipping notice
All of USA Cycle’s mail arrives in the mail room in the
and other documents have arrived, the clerk reviews
cash receipts department. A cash receipts clerk in the
these documents along with the sales order from the
mail room opens all the mail, separates the checks and
temporary file and prepares two copies of the sales
remittance advices, and endorses all the checks ‘‘For
invoice using the billing/accounts receivable department
Deposit Only.’’ Afterward, the clerk records each check
PC, which automatically records the sale in the sales
on a remittance list and sends one copy of the remit-
journal and updates the accounts receivable subsidiary
tance list to the billing/accounts receivable department
ledger and the general ledger. One copy of the sales
along with the remittance advices. Then the clerk pre-
invoice is mailed to the customer and the other is for-
pares a bank deposit slip and updates the cash receipts
warded to the sales department, which closes the open
journal on the cash receipts department’s PC. Later that
customer order file. After closing the open customer
day, the cash receipts manager deposits the checks in
order file, all documents in the file are sent to the bill-
the bank. In the billing/accounts receivable department,
ing/accounts receivable department. These documents
a clerk updates customer accounts on the department’s
are then filed in the accounts receivable pending file
PC with the information from the remittance advices,
along with other documents the billing/accounts receiv-
which automatically updates the accounts receivable
able department receives to await customer payment.
subsidiary and general ledger control accounts. The bill-
ing/accounts receivable clerk also closes the accounts
Description of Sales Return Procedures receivable pending file for invoices that have been paid
When goods are returned to the receiving department, in full. Finally, the clerk files all source documents
the receiving clerk counts and inspects the returned along with the remittance list and remittance advices in
goods and then prepares two returned-goods slips. Fol- the sales history file.
lowing this, the manager in the receiving department
evaluates the circumstances of the return and decides Required
whether to grant credit and stamps the slips accordingly. a. Create a data flow diagram of the current system.
Afterward, the goods are sent to the warehouse with b. Create a system flowchart of the existing system.
one of the stamped return slips. c. Analyze the internal control weaknesses in the
In the warehouse, a warehouse employee enters the system. Model your response according to the six
information on the warehouse department PC, which categories of physical control activities specified in
updates the inventory subsidiary ledger records. The SAS 78/COSO.
second stamped slip is sent to the billing/accounts re- d. Prepare a system flowchart of a redesigned
ceivable department, where the sales journal, accounts computer-based system that resolves the control
receivable subsidiary ledger, and general ledger are weaknesses you identified. Explain your solution.