PBL 1:REVENUE CYCLE

PART A: SALES ORDER SYSTEM

Shade Ltd sells various camping products and equipment for local market. The revenue process begins in the sales department of the firm. Customers normally placed orders through the company's website, by fax or phone. Upon receiving customer order, a clerk in the sales department write up the customer order using pre-numbered sales invoices. Credit is automatically granted to previous customers, while new customers must receive credit approval from the sales manager. The sales clerk prints out three copies of the sales order, a stock release form and a packing slip.

The billing department receives a copy of the sales order, the warehouse receives the stock release form together with a copy of the sales order, and the shipping department receives the packing slip. The final copy of the sales order is filled in the sales department.

After the warehouse receives a copy of the sales order and the stock release form, a warehouse clerk picks the products and sends it to the shipping department along with the stock release form. The clerk then updated the inventory subsidiary ledger from his terminal and filed the sales order in the warehouse. He also prepares a copy of account receivable summary and sends it to the general ledger department.

When the shipping department receives the packing slip from the sales department and the stock release form from the warehouse, the shipping clerk prepares a bill of lading. The product together with the bill of lading and the packing slip are then sent to the carrier. Finally, the clerk files the stock release form in shipping department.

In the billing department, upon receipt of the sales order, the billing department clerk creates a sales invoice and sends it to the customer. The clerk then updated the sales journal and the account receivable subsidiary ledger, and prints a hard-copy account receivable summary and sales journal voucher, which are sent to the general ledger department.

The general ledger clerk posts the account receivable summary and the sales journal voucher to the general ledger and the details to the journal voucher file. The clerk then files these documents in the general ledger department.

REQUIRED:

a.Draw a system flowchart for the above re11enue system of Shade Ltd.

(24 marks)

b.

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Select six (6) important control documents currently used by Shade Ltd in its revenue system and briefly explain the\function) of those documents.(15 marks)

c.Explain how reengineering of the sales order processing subsystem can be achieved using the internet.

(10 marks)