Description of Sales Order Procedures
The USA Cycle Company sales order process begins when a sales representative takes an order from the customer over the phone or fax (for established customers)and prepares the customer order. The sales clerk uses aPCs to input the customer order into one of two differentdata files, either the custom-design order file or the regular order file. The system manager in the sales department periodically checks the Web server for orders thatcome in through the Internet and prints these orders forthe sales clerk to enter as sales orders.At the end of the day, the sales clerk updates the customer file from the regular sales order file and the custom design sales order file and prints three copies of the salesorders, including a factory order for each custom-designorder. The clerk forwards the sales orders to the warehouse, where goods are retrieved from inventory and
shipped to the customer. The clerk also sends the factoryorders for custom design bicycles to the factory for assembly. One copy of the sales order is filed in the opencustomer order file for use in answering customerinquires. The last copy of the sales order is sent to the billing department for preparation of the sales invoice.Once the warehouse receives a sales order, a warehouse worker retrieves the goods and accesses the warehouse department PC to update the inventory subsidiaryledger using an inventory-management application program. Another worker packs the goods and prepares twocopies of the bill of lading as well as a packing slip. Thepacking slip is attached to the shipping container, and the
two copies of the bill of lading are sent to the shippingcompany along with the goods. The worker also preparesa shipping notice that is sent to the billing departmentalong with a bill of lading, sales order, and a factoryorder (if the goods were for a custom-designed bicycle).When the factory receives a factory order for a custom-designed bicycle from the sales department, a factory worker prepares a material-release form and sendsit to the warehouse for the materials. After the workerassembles the product according to the order specifications, the factory order and the finished product are sentto the warehouse, where the shipping documents areprepared, and the goods are shipped to the customer inthe same way as other sales orders.After receiving the sales order from the sales department, the billing/accounts receivable department clerkfiles it in a temporary file until the shipping notice, thebill of lading, and the sales order or factory order havearrived from the warehouse. Once the shipping noticeand other documents have arrived, the clerk reviewsthese documents along with the sales order from thetemporary file and prepares two copies of the salesinvoice using the billing/accounts receivable departmentPC, which automatically records the sale in the salesjournal and updates the accounts receivable subsidiaryledger and the general ledger. One copy of the salesinvoice is mailed to the customer and the other is forwarded to the sales department, which closes the opencustomer order file. After closing the open customerorder file, all documents in the file are sent to the billing/accounts receivable department. These documents
are then filed in the accounts receivable pending file along with other documents the billing/accounts receivable department receives to await customer payment.
Description of Sales Return Procedures
When goods are returned to the receiving department,the receiving clerk counts and inspects the returnedgoods and then prepares two returned-goods slips. Following this, the manager in the receiving departmentevaluates the circumstances of the return and decideswhether to grant credit and stamps the slips accordingly.Afterward, the goods are sent to the warehouse with
one of the stamped return slips.In the warehouse, a warehouse employee enters theinformation on the warehouse department PC, whichupdates the inventory subsidiary ledger records. Thesecond stamped slip is sent to the billing/accounts receivable department, where the sales journal, accountsreceivable subsidiary ledger, and general ledger areautomatically updated by crediting the customer
account. Both return slips are filed by billing/accountsreceivable in the returned goods file for future businessevaluation.
Description of Cash Receipts Procedures
All of USA Cycle’s mail arrives in the mail room in thecash receipts department. A cash receipts clerk in themail room opens all the mail, separates the checks and
remittance advices, and endorses all the checks ‘‘ForDeposit Only.’’ Afterward, the clerk records each checkon a remittance list and sends one copy of the remittance list to the billing/accounts receivable departmentalong with the remittance advices. Then the clerk prepares a bank deposit slip and updates the cash receipts
journal on the cash receipts department’s PC. Later thatday, the cash receipts manager deposits the checks inthe bank. In the billing/accounts receivable department,a clerk updates customer accounts on the department’sPC with the information from the remittance advices,which automatically updates the accounts receivablesubsidiary and general ledger control accounts. The billing/accounts receivable clerk also closes the accountsreceivable pending file for invoices that have been paidin full. Finally, the clerk files all source documents
along with the remittance list and remittance advices in the sales history file.a.Create a data flow diagram of the current system.