Katrupi, Inc., has five departments that handle all

sales, billing, and collection processes. The five

departments are sales, billing, accounts receivable,

warehouse, and general ledger. These processes

occur as follows:

a. A customer mails a purchase order to Katrupi,

and it is forwarded to the sales department.

b. A sales clerk in the sales department prepares a

fourcopy sales order. Two copies are forwarded

to billing, one copy to the warehouse, and one

copy to general ledger. The sales clerk posts the

sale to the sales journal.

c. Upon receiving the sales order, the warehouse

picks goods from the warehouse, updates the

inventory subsidiary ledger, and ships the goods to

customers. The copy of the sales order is given to

the common carrier to accompany the shipment.

d. Upon receiving the sales order, the billing

department looks up prices in the price list and

adds these prices to the sales order. One copy is

sent to the customer as the invoice. The second

copy is forwarded to accounts receivable.

e. Upon receiving the sales order from billing, the

accounts receivable temporarily stores the sales

order until the customer mails a check and

remittance advice to accounts receivable. The

accounts receivable department matches the

check to an open sales order, posts to the

accounts receivable subsidiary ledger and the

cash receipts journal, and deposits checks in the

bank daily.

f. Upon receiving the sales order from the sales

department, the general journal and general

ledger are updated.

Problem: Describe any weaknesses in these processes or

internal controls. As you identify weaknesses, also

describe your suggested improvement.