12-24. The Berridge Company (Document Flowcharts)

The Berridge Company is a discount tire dealer that operates 25 retail stores in a metropolitan area. The company maintains a centralized purchasing and warehousing facility and employs a perpetual inventory system. All purchases of tires and related supplies are placed through the companys central purchasing department to take advantage of the quantity discounts offered by its suppliers. The tires and supplies are received at the central warehouse and distributed to the retail stores as needed. The perpetual inventory system at the central facility maintains current inventory records, which include designated reorder points, optimum order quantities, and balance-on-hand information for each type of tire or related supply.

The participants involved in Berridges inventory system include (1) retail stores, (2) the inventory control department, (3) the warehouse, (4) the purchasing department, (5) accounts payable, and (6) outside vendors. The inventory control department is responsible for maintenance of the perpetual inventory records for each item carried in inventory. The warehouse department maintains the physical inventory of all items carried by the companys retail stores.

All deliveries of tires and related supplies from vendors are received by receiving clerks in the warehouse department, and all distributions to retail stores are filled by shipping clerks in this department. The purchasing department places every order for items needed by the company. The accounts-payable department maintains the subsidiary ledger with vendors and other creditors. All payments are processed by this department. The documents used by these various departments are as follows:

Retail Store Requisition (Form RSR). The retail stores submit this document to the central warehouse whenever tires or supplies are needed. The shipping clerks in the warehouse department fill the orders from inventory and have them delivered to the stores. Three copies of the document are prepared, two of which are sent to the warehouse, and the third copy is filed for reference.

• Purchase Requisition (Form PR). An inventory control clerk in the inventory control department prepares this document when the quantity on hand for an item falls below the designated reorder point. Two copies of the document are prepared. One copy is forwarded to the purchasing department, and the other is filed.
• Purchase Order (Form PO). The purchasing department prepares this document based on the information found in the purchase requisition. Five copies of the purchase order are prepared. The disposition of these copies is as follows: copy 1 to vendor, copy 2 to accounts-payable department, copy 3 to inventory control department, copy 4 to warehouse, and copy 5 filed for reference.
• Receiving Report (Form RR). The warehouse department prepares this document when ordered items are received from vendors. A receiving clerk completes the document by indicating the vendors name, the date the shipment is received, and the quantity of each item received. Four copies of the report are prepared. Copy 1 is sent to the accounts-payable department, copy 2 to the purchasing department, and copy 3 to the inventory control department. Copy 4 is retained by the warehouse department, compared with the purchase order form in its files, and filed together with this purchase order form for future reference.
• Invoices. Invoices received from vendors are bills for payment. The vendor prepares several copies of each invoice, but only two copies are of concern to the Berridge Company: the copy that is received by the companys accounts-payable department and the copy that is retained by the vendor for reference. The accounts-payable department compares the vendor invoice with its file copy of the original purchase order and its file copy of the warehouse receiving report. Based on this information, adjustments to the bill amount on the invoice are made (e.g., for damaged goods, for trade discounts, or for cash discounts), a check is prepared, and the payment is mailed to the vendor.

Assignment:

Draw a document flowchart