Question

62. At Kingston Industries, the revenue processes are conducted by five employees. The five employees are the sales clerk, warehouse clerk, accountant 1, accountant 2, and the collection clerk. A description of their duties is as follows:

    1. The sales clerk receives customer orders by phone. She prepares a four‐copy sales order form. She files one copy, one copy goes to the warehouse clerk, one copy goes to accountant 1, and one copy is mailed to the customer.

    2. After receiving a sales order, the warehouse clerk prepares a packing slip, takes the proper items from the warehouse, and ships them with the packing slip enclosed. The sales order is stamped with the ship date, and the shipping log is updated. The sales order is filed by customer number.

    3. After receiving the sales order from the sales clerk, accountant 1 reviews the customer records and either approves or disapproves customer credit. If he approves the customer’s credit, he stamps the sales order “approved” and forwards it to accountant 2. Accountant 1 prepares a three‐ copy invoice. One copy is mailed to the customer, one copy is forwarded to accountant 2, and one copy goes to the collection clerk.

    4. Accountant 2 matches the approved sales order to the invoice and files these by customer number.

    5. After receiving a copy of the invoice, the collection clerk posts the sale to the sales journal and the accounts receivable subsidiary ledger. Daily totals from the sales journal are sent to accountant 1, and she posts these sales summaries to the general ledger.

    6. A mail clerk forwards customer checks to the collection clerk. The collection clerk stamps the check “For Deposit Only” and records it in the accounts receivable subsidiary ledger. The check is also recorded in the cash receipts journal by the collection clerk. The collection clerk deposits checks in the bank account weekly. A weekly summary of cash receipts is forwarded to accountant 2, and she records these summaries in the general ledger.

Required:

1. Draw two process maps to reflect the sales processes and collection processes at Kingston. The student website has a document flowchart in an Excel file for your reference.

2. Describe any weaknesses in these processes or internal controls. As you identify weaknesses, also describe your suggested improvement.

3. Draw two new process maps that include your suggested improvements. One process map should depict the sales processes, and the second process map should depict the cash collection processes.

Answer 1

Digitale ENG 22-01-2020 Solver sales Proces: - sales cleek sales odes received a Warchoule Accountant cleep ships the Items Approves the credit and Repare envoice Sew to Enter Accountant a Colleckon cleak verified and the of Enter the entries the custome number in Broks of accounts and matching an with the Invoice

Collection proces : - Accountant to Debtors list to be given Collection people Delete PgUp P Follow up with Debtors Space Num Lock Colleet the cheeks. Deprit live the detais Accountant

New Proces sales Proursy Rirst after getting the ordel from the Customer the sales person production To be handovee to Delete PgUp manages Pg Num space Lock Discuss with Management to the appsanals, price tination faw Discuss with Puechace department availabity of nathnals Accept the order Take the pucchae ordes Production of goods Dis prepare emrice Accountaro

PgUp PgDn H Num Lock & in sales Roas the order received by phone is not ang gustable bellee opt for Email system to avoid the discrepencies if any shipping by watchouwing cleck withow onvoice while betole shipping onvoice need to be prepared Accountan a is not requieod because the Invoice can match worth the sales ordu can be done by e Arroana in collection cleak There are no ontenal controls on Propes because after gething the order the Production department should analyse the rate, Quantity befole giving acceptance to the order. There is no procus to entom do the raw materia deparmene regarding the availability of the reg wel raw material for the product to be sold weaknesses in the collection process :- 1. There is no system of following up the customers to collect the payments by duco date. The monitoring Collection of the proceeds. 1 Syremo vegaoding is not there The checks collected 40 depositing weekly once it is better to deport the chelles for Everydays 10) once in two days.

DELL collection P rail clock custome checks Collection cleek PgDn Home End Accounts recevable ledge bepsie en the bank sent to acconntaw 2 N accounts Enter Entered in Books of CORE