Green Thumb Nursery is a garden center wholesaler in northwest Missouri that sells and distributes a wide range of garden products and equipment including organic fertilizers, premium flower and grass seeds, organic pesticides, and garden spreaders. The customers are primarily small garden centers and landscape companies in the Midwest. Sales are on credit.

Green Thumb$$s current information system includes manual procedures supported by independent $($nonnetworked$)$ personal computers in each department. Communications between departments is entirely through hard$-$copy documents. Recently, Green Thumb has been receiving complaints from customers and suppliers about billing, shipping, and payment errors. Management believes that these complaints stem, in part, from their outdated computer system. You have been hired to assess Green Thumb$$s procedures and internal controls. The following is a description of Green Thumb$$s revenue cycle.

Sales Procedures

The revenue cycle begins when a customer places an order with a sales representative by submitting a purchase order. A sales department employee enters the customer order into a standard sales order format using Word installed on a personal computer to produce: three sales order copies, a stock release document, a shipping notice, and a packing slip. The accounting department receives a copy of the sales order, the warehouse receives the stock release and a copy of the sales order, and the shipping department receives a shipping notice and packing slip. The final sales order copy is sent to the inventory control department.

Upon receipt of the sales order, the accounting clerk manually prepares an invoice and sends it to the customer. Using data from the sales order, the clerk then enters the details of the sale in the department personal computer and records the sale in the sales journal and in the accounts receivable subsidiary ledger. At the end of the day, the clerk prepares a hard copy of a sales journal voucher, which is sent to the general ledger department.

Upon receipt of the sales order and the stock release, the warehouse clerk picks the products and sends them to the shipping department, along with the stock release. The warehouse clerk then updates the internal inventory stock records on the warehouse personal computer and files the sales order in the warehouse.

The shipping department clerk receives a shipping notice and packing slip from the sales department. The clerk files the shipment notices and holds the packing slip until they receive the stock release and products from the warehouse. Upon receipt of the stock release, the shipping clerk prepares the two copies of a bill of lading using Word on a personal computer. The bills of lading and the packing slip are sent with the product to the carrier. The clerk then files the stock release in the department.

Upon receipt of the sales order copy, the inventory control clerk updates the inventory subsidiary ledger and files the sales order in the department. At the end of the day, the clerk prepares a paper copy inventory account summary and sends it to the general ledger department.

The general ledger clerk posts the journal voucher and inventory summary to the general ledger, which is stored on the department personal computer, and the clerk then files these documents in the general ledger department.

Cash Receipts Procedures

Mail room employees open cash receipts from customers and reconcile the amounts on the checks and remittance advices and send remittance advices to the accounting department, where a clerk records each remittance advice on a remittance list. The remittance list is then sent to the cash receipts department. Using the remittance advices, the accounting clerk updates the customer accounts receivable on the department personal computer and files the advice in the department. At the end of the day, the clerk prepares an accounts receivable summary on the personal computer and sends a hard copy of the summary to the general ledger department.

The mail room clerk sends the checks to the cash receipts department, where a clerk endorses each check with the words $$For Deposit Only.$$ Next, the clerk reconciles the checks with the remittance list and records the cash receipts in the cash receipts journal on the department personal computer. Finally, the clerk prepares a deposit slip and sends it and the checks to the bank.

The general ledger clerk posts the accounts receivable summary to the general ledger accounts receivable control account and the cash account and files it in the general ledger department.

Requirements:

Create a document flowchart of the existing system.

Use Excel, Word, or pen and paper.

Be sure to prepare a flowchart of the Sales Process AND Cash Receipts Process SEPARATELY.