Lee Incorporated has the following processes related to purchasing:

When it is determined that an item should be ordered, the purchasing department prepares a three-copy purchase order. The rst copy is mailed to the vendor, the second copy is led by PO number in the purchasing department, and the third copy is forwarded to inventory control. Inventory control updates the inventory ledger with the quantities that were ordered and les the purchase order copy by date.

When ordered items arrive at the receiving dock, the packing slip is inspected and a two-copy receiving report is prepared. The rst copy is forwarded to the purchasing department, where it is led with the purchase order. The second copy is led in the receiving department by date. The packing slip is forwarded to the accounts payable department.

Vendors mail invoices directly to the accounts payable department. The accounts payable department reviews the invoice and related packing slip, prepares a cash disbursement voucher, updates the accounts payable ledger, and les the invoice by date. The cash disbursement voucher is forwarded to the cash disbursements department. The packing slip is returned to the receiving department. The cash disbursements department prepares a two-copy check, mails the rst copy to the vendor, and forwards the second copy to the general ledger department. The cash disbursement voucher is forwarded to the accounts payable department where it is led with the invoice.

The general ledger department updates the general ledger accounts, using the second copy of the check, and then forwards the check copy to cash disbursements to be led by check number.

Part III - B: Lee Incorporated: Based on total 2015 sales of $4,000,000, management has forecasted the following monthly growth in sales and monthly cash collection measures for 2016:

Create a 12-month cash flow budget in Excel using the following assumptions:

Annual 2015 sales of $4,000,000 with forecasted monthly growth of 2%

45% of each months sales for cash; 25% collected the following month; 20% collected 2 months later; 8% collected 3 months later; and 2% never collected Initial cash balance of $300,000

Assuming an initial cash balance of $300,000, management has concluded that they will achieve an ending cash balance of $41,000,000.

1.Draw a new document flowchart that include your suggested improvements.

2.Identify any weaknesses in internal controls within the purchase processes and indicate the improvements you would suggest.