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Scottsdale Pty Ltd manufactures a specialised part for wind turbines used in windfarms throughout Australia. The following describes some aspects of the company's revenue cycle.

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Scottsdale Pty Ltd manufactures a specialised part for wind turbines used in windfarms throughout Australia. The following describes some aspects of the company's revenue cycle. Customers are able to place orders through the online order form on the company's website, or by email or by telephone. All sales are on credit, free on board (FOB) destination. During the past year, with the growth in the renewable energy sector and windfarms in particular, sales have increased dramatically. However, 10% of credit sales have had to be written off as uncollectible, including several large online orders to first-time customers who disputed ordering or receiving merchandise. Customer orders are picked and sent to the warehouse, where they are placed near the loading dock in alphabetical sequence by customer name. The loading dock is used both for outgoing shipments to customers and for receipt of incoming deliveries. There are 20 to 30 incoming deliveries every day, from a variety of sources. The increased volume of sales has resulted in a number of errors in which customers were sent wrong items. There have also been some delays in shipping because items that supposedly were in stock could not be found in the warehouse. Although a perpetual inventory is maintained, there has been no physical count of inventory for two years. When an item is missing, the warehouse staff write the data in a log book. Once a week, the warehouse staff use the log book to update records. The accounting information system is configured to prepare a sales invoice only after the shipping employee enters the actual quantities of inventory sent to the customer. This ensures that customers are billed only for items actually sent and not for anything on back order. Required a. Identify and clearly explain three (3) weaknesses in Scottsdale Pty Ltd's revenue cycle and clearly explain the problem that would result from each weakness. [7 marks] b. Recommend and explain one control that would correct each weakness identified in part a above. [7 marks] c. Suggest and clearly explain three improvements you would make to Scottsdale Pty Ltd's revenue cycle

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