FLOW CHART FOR ACCOUNTS RECEIVABLE

Need help with flowchart for Accounts Receivable.

CASE MATERIALS MARY'S SUNSHINE POOL INCORPORATED dba as Your Teams First Names 4000 AIS Rocks Blvd. Anywhere, XX 12345 Federal Tax ID: XXX-XX-XXXX COMPANY BACKGROUND Mary's Sunshine Pool Incorporated is a merchandising firm that sells various pool supplies, e.g., chemicals, diving boards, pumps, ladders, poolside furniture, pool games, floating loungers, etc. At present, Mary's Sunshine has a manual accounting system; however, the company has hired you to implement an accounting program to be used on personal computers as of July 1, the beginning of the current fiscal year. Mary and Bill, the stockowners of the company, have made available to you the balance sheet and data from the subsidiary ledgers for the fiscal year ended June 30 . As of June 30, Mary's Sunshine Pool Company consisted of a showroom and an office in one building, a distribution center in another building, and five additional employees. The additional employees are: - Lauren Allen, a salesperson at the showroom - Paul Barton and Ernest Callahan, traveling salesmen - Fred and Ted Hill, Mary and Bill's twin sons who work at the distribution center only during the summer months. Mary's Sunshine Pool Incorporated owns the land, the showroom/office building, the distribution center building, a delivery truck and two automobiles driven by the traveling salesmen. REVENUE CYCLE Order Processing Sales are made to users of pool supplies. Pool supplies are displayed in the showroom and orders for products are taken by the Showroom Salesperson and captured on a Sales Order form. The traveling salesmen also take orders and capture orders on a Sales Order form. All sales are credit sales. The Sales Order forms are sent to Bill for approval. Bill approves credit for new customers based on his initial impressions formed when meeting the new customers - and on the opinions of his bowling buddies. Bill automatically approves orders for existing customers. The customer master files are maintained in Bill's office, but he does not normally need to consult the files since he has mostly memorized the customer list. Generally, Bill wants to make sales and very few Sales Orders are not approved. In the few cases where Bill does not approve the Sales Order, he marks the Sales Order accordingly, typically in red ink with an X. Approved Sales Orders receive a check mark. He then makes a copy of the disapproved Sales Orders and two copies of the approved Sales Orders. He sends one copy of both the approved and disapproved Sales Orders as well as all of the original orders to Mary. He sends the other copy of the approved Sales Orders to the twins in the distribution center so they can fill them. The distribution center is located on the same lot as the showroom/office building. It is here that the orders are filled and shipped. When the twins are not working, Bill fulfills the Sales Orders himself. Mary prepares a report for each salesperson listing both the approved and disapproved Sales Orders and sends the reports along with the copy of the marked Sales Orders to the salespeople. The salespeople notify customers if their Sales Order was not approved and then throw the reports and 2 disapproved sales orders in their car trunks or wastebaskets. The salespeople file the copy of the approved Sales Orders for later use. Mary files the original approved Sales Orders until a shipping notice is received. The disapproved Sales Orders are discarded. Shipping Out of town orders are shipped via common carrier FOB Destination. Recently, Bill had a brief meeting with the twins about the possibility of using one single common carrier, Mediocre Shipping, instead of using multiple shipping companies. Paul Barton, the top salesperson, has since established a contract with Mediocre Shipping for all of the shipping needs going forward starting next month. The advantage to Mary's Sunshine would be a rebate paid quarterly of up to 15% of freight charges and a $1,000 gift delivered to the top salesperson. Based on prior years' business, this rebate would be in excess of $10,000 per year. Bill did not evaluate the offer from Mediocre Shipping's primary competitor, Superior Shipping. The twins (or Bill) take all the approved Sales Orders, find the items, box the merchandise and prepare a bill of lading for the carrier. Their copy of the Sales Order is marked "shipped" and is sent back to Mary, along with a copy of the bill of lading. After an order has been shipped, the twins update the inventory cards to keep an accurate record of items on hand. At the end of the week, all of the inventory cards are reviewed and a weekly inventory report is prepared. Accounts Receivable Typically, Mary matches the Sales Order marked "shipped" to the original Sales Order she previously filed. She then prepares a two-part invoice and mails the original to the customer. She records the sales in the sales journal and the receivables in the subsidiary ledger. Mary files - by date her copy of the invoice along with the sales order and the shipping documents. During the summer season, Mary's Sunshine often has difficulty shipping customer orders in a timely manner. Supplier delays in delivery to Mary's Sunshine and increased volume cause delays in outgoing shipments. At the end of some months, to address this inefficiency issue and to help keep cash collections on target, Mary prepares and mails customer invoices using the original sales orders filed instead of those marked "shipped" (in advance of the actual shipment of goods to the customer.) She believes this practice also aids in the proper matching of revenues and expenses. As usual, Mary records the sales in the sales journal and in the accounts receivable subsidiary ledger when she prepares the customer invoice. Then, later, when the copy of the Sales Order marked "shipped" comes from the distribution center, Mary adds that copy to the original Sales Order and the invoice. Customers are allowed to take a 2% discount if they pay within 10 days of the billing date; otherwise, the net amount is due in 30 days. Once per month, Mary prepares a listing of delinquent customers that she sends to the salespeople. They are responsible for collecting the overdue amounts and reporting the collections and payments received to Mary. Once per quarter, Mary writes-off customer balances if they haven't been collected in 3 months