Need help with manual accounting flowcharts for each separate bold section. Unsure of how to start

Order Processing

All sales are credit sales, which are subject to the approval of Ed. Ed approves credit based on

his "gut" feeling for each individual case and on the opinions of his bowling buddies. Generally, Ed

wants to make the sales and few orders are not approved. In the few cases where Ed does not approve

the credit, he marks his copy of the sales order accordingly. He makes a copy of all of the disapproved

orders and two copies of the approved orders. He sends one copy of both the approved and disapproved

orders and all of the original orders to Mary. He sends a copy of the approved orders to the twins so

they can fill them.

Mary prepares a report for each salesperson listing both the sales orders turned down for credit

and the approved sales and sends the reports along with the marked sales orders to the salespeople. The

salespeople notify customers of disapproved credit and then throw the reports and disapproved sales

orders in their car trunks or wastebaskets. The salespeople file the original approved sales orders for

later use. Mary files the copies of the approved orders until a shipping notice is received. The copies of

the disapproved orders are thrown away.

Shipping

Out of town orders are shipped common carrier FOB Destination. Recently, Ed had a brief

meeting with the twins about the possibility of sending the bulk of freight shipments through one

common carrier, Mediocre Freight. The advantage to Mary's Sunshine would be a rebate paid quarterly

of up to 15% of freight charges. Based on prior years' business, this rebate would total in excess of

$15,000 per year. Without giving this practice much thought, Ed told the twins to begin using Mediocre

Freight as much as possible.

The twins take all of the approved orders, find and box the merchandise and prepares a bill of

lading for the carrier. The twins send their copy of the sales order marked "shipped" and a copy of the

bill of lading to Mary.

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

Mary matches the sales order marked "shipped" to her copy of the sales order. 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 with her copy of the

sales order and the shipping documents.

During the summer season, Mary's Sunshine often has difficulty in 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, Mary prepares and mails customer invoices ahead of

actual shipment. She claims this practice more closely matches revenues and expenses. As usual, Mary

records the sales in the sales journal and in the accounts receivable subsidiary ledger.

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.

Cash Receipts

Mary opens the mail each day; sorts the cash receipts and the invoices to be paid and logs them

in the appropriate logs. Mary records the receipts on customers account in the cash receipts journal and

in the accounts receivable subsidiary ledger. After recording all the cash receipts, she prepares a deposit

slip and takes the cash to the bank.

Purchasing

Every Friday afternoon, the salespeople prepare weekly sales reports from their copies of the

sales orders. They send the reports to Ed and then refile their sales orders by customer name. Ed

reviews the weekly sales reports and the weekly inventory reports prepared by Fred and Ted. Ed

"eyeballs" the numbers, notes any shortages in inventory, and prepares 3-part purchase orders. He mails

the original to the vendor, sends one to the twins in the distribution center and one copy to Mary.

As noted above, Fred and Ted have a card file for keeping track of inventory. Each card has a

running balance to expedite the preparation of the weekly inventory reports for Ed. When they receive

a copy of a purchase order, they pull the cards for the item(s) ordered, record the quantity ordered and

the P.O. number, and file the purchase order in numerical order. When the shipment arrives, Fred and

Ted pulls the purchase order to make sure that the items received were the items ordered and note any

back orders on the purchase order. Then they pull the inventory cards, mark the items received, and

prepares a receiving report that is sent to Mary.

Cash Disbursements

As noted above, Mary opens the mail and separates and logs the cash receipts and the invoices to

be paid. Invoices are filed in alphabetical order by due date. Each Thursday, Mary pulls the invoices

that are due that week and types three-part checks. The checks, along with the invoices, are given to Ed

for his approval and signature. After Ed signs the checks, Mary mails the original, files the second copy

in check number order, and attaches the third copy to the invoice. She then enters the check in the cash

disbursement journal and the accounts payable subsidiary ledger. The third copy of the check and the

attached invoice are filed alphabetically by vendor name.

Payroll

A full service payroll processing company called Payroll Paid Promptly (PPP) processes payroll.

PPP calculates the payroll, creates and mails the checks to the employees and remits all payroll taxes

and other withholdings to the appropriate locations. They send Mary a report once per month reflecting

the transactions made on behalf of PPP. Mary prepares a journal entry to reflect the payroll and updates

the general ledger. PPP charges a fee of 10% of the gross payroll for the payroll service. Mary

prepares the check for these services once per month.