The customer sales order is received via phone or through the mail. Gus Grinwich, the sales clerk, receives the sales order and checks the customers credit record. Once Grinwich checks the customers credit record, he prepares the sales order. From this sales order, Grinwich prepares a customer copy, stock release, shipping notice, two copies of the invoice, ledger copy, packing slip, and the file copy. One of the invoice copies, the ledger copy, and the file copy go to the billing department. The other copy of the invoice and the shipping notice are sent to the shipping department. The stock release and the file copy are sent to the warehouse department. In the warehouse department, Steve Rossini, the warehouse clerk, receives the stock release and Phil Denuto, the stocker, checks the shelves to pick the gloves for the sales order. Once the goods are taken off the shelf in the warehouse, the stock release is sent to the billing department. Sparky Littleton, the billing clerk, reconciles the invoice, ledger copy, and stock release to make sure that the amount of inventory taken from the shelves is the same as the amount listed in the invoice. Littleton bills the customer for the goods released from the warehouse department. Littleton prepares the sales journal and makes the journal voucher. The journal voucher is sent to the general ledger department. The stock release is sent to the inventory control. The invoice is then filed in the billing departments file and the ledger copy is sent to the general ledger department. The shipping department receives the invoice and the shipping notice. They send the goods to the carrier along with the invoice, the packing slip, and the two copies of the bill of lading. The invoice states the amount and quantity of goods that the customer requested in the sales order form. The shipping department files the shipping notice from the customers order. Inventory control receives the stock release form from the billing department. With the stock release form, Bobby Higgins, the inventory clerk, updates the inventory subsidiary ledger relating to the goods that have been released from the warehouse. The ledger copy arrives at the general ledger department from the billing department. Dave Fielder, the general ledger clerk, uses the ledger copy to update the accounts receivable subsidiary ledger. Periodically, Fielder prepares the accounts receivable summary and reconciles it with the journal voucher from the inventory subsidiary ledger and the journal voucher produced by the sales journal in the billing department in order to update the general ledger. These three forms are then filed by Fielder. The Cash Receipts System The cash receipts system starts when the wholesalers send back the remittance advice with their payment. This allows Craig Nelson, the mail room clerk, to collect the payment from the customer and process the cash receipt. Nelson then records the cash receipts in the cash receipts journal. Nelson prepares the deposit slips for the funds to be deposited into the bank along with the checks. The remittance advice is sent to the general ledger department to update the accounts receivable records and is then filed in the billing department. Finally, Nelson prepares the cash receipt journal, out of which comes a journal voucher that is sent to the general ledger department. Luis Gonzalez, the general ledger clerk, prepares the account summary and journal voucher, which is used to update the general ledger. The account summary and journal voucher is put into the files for record. Gonzalez uses the remittance advice copy sent from the mail room, the deposit slip copy from the bank, and the journal voucher from the account summary to reconcile the deposit slips. He then reconciles the deposit slips from the bank with the totals from the accounts receivable and mail room. EXPENDITURE CYCLE Purchase System Inventory control department receives a list of items in inventory and total amounts in each category. The inventory control clerk, Keith Fernando, is given the quantity-onhand for all gloves (softball, infielder, outfielder, catcher, and pitcher). The quantity-onhand of each inventory is calculated by the inventory control system, called PICS (Physical Inventory Control Scanner). PICS is an automated computer system used to determine the quantity-on-hand of inventories at specific times. It scans in the inventory when received in the receiving department and scans it out upon shipment in order to update the quantity-on-hand. As each inventory item is updated, Fernando checks to see if the quantity-on-hand drops to the predetermined reorder point. If this is the case, Fernando prepares a purchase requisition (PR). Two copies of the purchase requisition are made. One is sent to purchasing to be used to prepare a purchase order (PO) at a later date. Inventory control department keeps the other copy and waits for a copy of the purchase order from purchasing in order to reconcile the amounts on the PR with the amounts on the PO. Inventory control department receives a copy of the purchase order from purchasing and compares it to the second copy of the purchase requisition. These two forms are kept in an open purchase requisition file that is filed by purchase requisition number and kept in an open account until notification that the items have been received by the receiving department via the receiving report (RR). The RR is then compared with the PO and PR to make sure that the items received are identical to the items ordered. These three forms are posted to the inventory ledger and a summary report is generated and sent to the general ledger department. The receiving report, purchase order, and purchase requisition are then kept in a closed purchase requisition file by purchase requisition number. Purchasing department receives the purchase requisition from inventory control, sorts the purchase requisitions, and prepares a multi-part purchase order. The purchasing manager, Jack Tucker, chooses the supplier based on the five-supplier list given by management. One copy of the PO is sent to inventory control department, where Fernando keeps it in the open purchase requisition file. One copy is sent to the accounts payable (AP) department to be filed in the accounts payable pending file. Another copy is sent to the receiving department to be filed until the inventories arrive. One copy is mailed to the supplier. The last copy is kept in purchasing and is filed along with the purchase requisition received by inventory control in the open purchase order file, awaiting the receiving report sent by the receiving department to confirm that inventories have been received. Purchasing department is sent an invoice by the supplier through the mail that charges Triple Play the dollar amount for the inventories requested. This is kept in the open purchase order file until the receiving report is received. When the receiving report is received, the purchase order, purchase requisition, and suppliers invoice are taken out of the open purchase order file and the amounts are then compared with those on the receiving report. All four of these reports are then filed in the closed purchase order file, sorted by purchase order number. Purchasing department then sends a message through a computer terminal to the accounts payable department that is a copy of the invoice and simply states the quantity and price of the shipment received. The message is received by a computer terminal in the accounts payable department. Only the purchasing keyboard clerk, Lenny Sipowicz, can access the terminal, and only he knows the password needed to enter into the system. The same authority is given to the accounts payable keyboard clerk, Danny Thomson. The message is sent to accounts payable usually two days later, after reconciling the PO, PR, RR, and suppliers invoice. The receiving department receives the goods and reconciles the information on the packing slip attached to the shipment with the information (such as quantity and price) listed on the purchase order which was sent by purchasing department and has been filed temporarily. The receiving clerk, Manuel Barriero, pulls the PO from the file and checks to see that the inventory received is the same as the quantity and price information on the PO. After checking that the information is correct, Barriero prepares a receiving report stating that the merchandise was received. One copy of the receiving report accompanies the physical inventories to the warehouse. Another copy is sent to purchasing and is reconciled with the open PO file. A third copy is sent to inventory control and is reconciled with the open PR file. A fourth copy is sent to accounts payable and is filed with the purchase order in the AP pending file. The last copy is filed with the purchase order and packing slip in the receiving department. Accounts payable department receives a message from purchasing department through the terminal, stating that the invoice has been received. Accounts payable has also received and is temporarily keeping the PO and RR in the AP pending file. When the message about the invoice is received through the terminal, the accounts payable clerk, Ivan Pushkin Rodriguez, records the liability and reconciles the information with the PO and RR in the AP pending file. After Pushkin records the liability, he sends the PO, RR, and copy of invoice to the open AP file. He also enters the information in the purchases journal and accounts payable subsidiary ledger and then prepares a journal voucher, which is sent to the general ledger department. The general ledger department receives a journal voucher from accounts payable department and a ledger summary from inventory control department. The general ledger clerk, Ozzie Cratchit, reconciles the journal voucher and ledger summary and posts to the inventory and AP control accounts in the general ledger. The journal voucher and ledger summary are then filed. Cash Disbursements System The cash disbursements process begins with the accounts payable department. Each day, the AP clerk, Pushkin searches the open AP file (including the PO, RR, and invoice) to find any items that are due and sends these three forms (known as the voucher packet) to cash disbursements department. The voucher packet is received by Wally Mayfield, the cash disbursements clerk. Mayfield reviews the documents for completeness and accuracy and then prepares two copies of the check to be disbursed. Mayfield signs the check and records the information in the cash disbursement journal, which produces a journal voucher to be sent to the general ledger department. One copy of the signed check is sent to the supplier, while the other copy is kept in the cash disbursements file. Mayfield then marks the voucher packet as paid and returns it to the accounts payable department. Upon receipt of the voucher packet from cash disbursements department, which states the amount of the check that was disbursed, the accounts payable department then removes the liability by updating the AP subsidiary ledger and keeps the voucher packet in the closed AP file. Finally, the AP clerk, Rodriguez send a ledger summary to the general ledger department. The general ledger clerk, Cratchit reconciles the journal voucher and ledger summary and posts to the cash and AP control accounts in the general ledger. The journal voucher and ledger summary are then filed.

Analyze the current system and prepare a document flowchart of the current system for the revenue and expenditure cycles.