ernal Control Cases MITH'S MARKET (SMALL BUSINESS ACCOUNTING SYSTEM) 89. Robert Smith opened a small fruit and vegetabic market in Bethlehem, Pennsylvania. Originally Smith sold only produce grown on his family farm and orchard. As the market's popularity grew, however, be added bread, canned goods, fresh meats. and a limited supply of frozen goods. Today Smith's market is a full range farmers market with a strong local customer base. Indeed, the market's reputation for low prices and high quality draws customers from other Pennsylvania cities and even from the neighboring state of New Jersey. Currently Smith's market has 40 employees. These include sales staff, shelf stockers, farm laborers, shift supervisors, and clerical staff. Recently Smith has noticed a decline in profits and sales, while his purchases of products for resale have continued to rise. Although the company does not prepare audited financial statements, Robert Smith has commissioned your public accounting firm to assess his company's sales procedures and controls. Smith's market revenue cycle procedures ate described in the following paragraphs: Revenue Cycle Customers push their shopping carts to the checkout register where a clerk processes the sale. The market has four registers, bat they are not dedicated to specifie sales clerks because the clerks play many roles in the day-to-day operations. In addition to checking out customens, sales clerks will stock shelves, unload delivery trucks, or perform other tasks as demand in various areas rises and falls throughout the day. This Auid-work demand makes the assignment of clerks to specifie tegisters impractical. At the beginnibg of the shiff, the stift supervisor collects four eash register drawers from the treasury clerk in an office in the back of the market. The Arawen contain $100 each in small bills (known as noat) to enable the clerkin to make change. The supervisor sigas a log indicating that he has taken custody of the float ind places the drawers into the respective cash registen. onily. Credit cand wers ufre for cash, check, or credit card The clerk swipes the performed in the uveal way. approval from the card inaer and obtuins online The customer then sims the credit card voucher. which the clerk places in a special cotropartucher. the cash register drawer. The customer receive receipt for the purchase and a copy of the credite voucher. For payments by check, the clerk requires the tomer to present a valid driver's license. The lice number is added to the check and the chexk matched against a "black" list of customers wh have previously passed bad checks. If the custone is not on the list, the check is accepted for payme and placed in the cash register drawer. The der then gives the customer a receipt. The majority of sales are for cash. The cert receives the cash from the customer, makes chang and issues a receipt for the purchase. At the end of the shift the supervisor returns ts cash register drawers containing the cash, chack and credit cards receipts to the treasury clerk an signs a log that he has handed in the cash draver The clerk later counts the cash and credit card ols Using a standalone PC, he records the total slo amounts in the sales journal and the general Leder Sales and Cash accounts. The Treasury clerk te prepares a deposit slip and delivers the cash, cheds and credit card vouchers to the local branch of bank two blocks away from the market. Required a. Create a data flow diagram of the current gys? b. Create a system flowchart of the existing systo c. Analyze the physical internal control wetkos? in the system. Model your response aceordies the six categories of physical control activios specified in the COSO internal control now d. Describe the IT controls that should be in plys this system. 2. TIGHT LINES FISHING AND CAMPING SUPPLIES (NETWORKED COMPUTER SYSTEM AND MANU PROCEDURES) Tight Lines Fishing and Camping Supplo York-based wholesaler of fishing and intermal controls. The followine parn Tight Lifies revenue cycle ptocedures