3.12 Charting. Inc., a new audit client of yours. processes its sales and cash receipts documents in the following manner.

1 Payment on account. Each morning a mail clerk in the sales department opens the mail. The mail clerk prepares a remittance advice (showing customer and amount paid) if one is not received. The checks and remittance advices are then for- warded to the sales department supervisor, who reviews cach check and forwards the checks and remittance advices to the accounting department supervisor.

The accounting department supervisor, who also functions as credit manager in approving new credit and all credit limits, reviews all checks for payments on past-duc accounts and then forwards the checks and remittance advices to the accounis receiv. able clerk, who arranges the advices in alphabetical order. The remittance advices are posted directly to the accounts receivable ledger cards. The checks are cndorsed by stamp and totaled. The total is posted to the cash receipts journal. The remittance

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advices are filed chronologically. After receiving the cash from the previous day's cash sales, the accounts receivable clerk prepares the daily deposit slip in triplicate.

The third copy of the deposit slip is filed by date, and the second copy and the oniginal accompany the bank deposit.

2 Sales. Sales clerks prepare sales invoices in triplicate. The original and see. ond copy are presented to the cashicr. The sales clerk retains the third copy in the sales book. When the sale is for cash, the customer pays the sales clerk, who presents the money to the cashier with the invoice copies.

The cashier approves a credit sale from an approved credit list aftcr the sales clerk prepares the three-part invoice. After receiving the cash or approving the invoice, the cashier validates the oniginal copy of the sales invoice and gives it to the customer. At the end of each day, the cashier recaps the sales and cash received and forwards the cash and the second copy of the sales invoices to the accounts receivable clerk.

The accounts receivable clerk balances the cash received with cash sales invoices and prepares a daily sales summary. The credit sales invoices are posted to the accounts receivable ledger, and then all invoices are sent to the inventory control clerk in the sales department for posting to the inventory control cards. After posting. the inventory control clerk files all invoices numerically. The accounts receivable clerk posts the daily sales summary to the cash receipts and sales journals and files the sales summarics by date

The cash from cash sales is combined with the cash received on account to make up the daily bank deposit

3 Bank deposits. The bank validates thewdeposit slip and returns the second copy to the accounting department, where the accounts receivable clerk files it by date.

Monthly bank statements are reconciled promptly by the accounting department supervisor and filed by date.

Clerk SALES DEPARTMENT Cashier Supervisor Mail clerk Supervisor ACCOUNTING DEPARTMENT Mail Accounts Receivable Clerk Open Checks mail Remittance Checks Checks Checks advice Remittance Remittance advice Remittance dvice advice Prepare remittance advice if needed Accounts Sales clerks receivable Post ledger Write, Retained invoice for in sales customer Sales book Post order check invoice total Sales invoice Sales Endorse checks journal Total cash and checks and prepare de posit slip To bank From Daily Cash Post sales summary File customer To customer po Post From Validated Inventory control clerk pales Invoice - File deposit slip on Cash bank Sales invoice File From Monthly bank statement Post bank Figure 3-12 Charting, Inc. Flowchart for Sales and Cash Receipts