Related questions
“The additional cost required to establish separate departments for warehousing,
shipping and inventory control is considered a necessary cost for the added benefit of
control over inventory.”
case study
The Revenue Cycle of RCE Limited.
RCE Limited is a Queensland based wholeseller that deals in the rafting and camping
equipment. In particular, RCE Limited serves outdoor sports camping retailers throughout
the Queensland. Mr. Chris Doubler has recently joined the accounting department of RCE
Limited as a head of the department. Mr. Doubler gathered a wide range of data from his
deparment using different sources to improve the operations of his departmetn. After
analysing this data, Mr. Doubler is concerned about the revenue cycle of RCE Limited.
You are running an accounting consultancy and considered as the best consultant on the
revenue cycle. During the initial meeting, you suspect that the business activities and related
data processing operations of the revenue cycle of RCE Limited might not closely associated
with providing goods and services to customers and collecting their cash payments. You
further elaborated that the revenue cycle can be categorised into (1) sales order processing
procedures (SOPP), and (2) cash receipts procedures (CRP). Consequently, you requested the
head of the accounting department to describe the SOPP and the CRP of RCE Limited
separately. This description is given below.
Sales Order Procedures of RCE Limited
The sales department encourages its customers to forward the orders in any form, including
mail, e-mail or fax. The sales clerk first converts these sales order into the standardised sales
order. For this purpose, the sales representative requests the missing information, if any. (In
the light of our discussion during the Interactive Tutorials, please mention this missing
information.) When the order is received, the sales clerk checks the customer’s
creditworthiness of the customer from his computer terminal. Sales clerk thinsk that checking
the accounting record is not technical and he can perform these duties efficiently. Two years
ago, the sales clerk requested the accounting department to provide him with a list of
customers whose account receivables are written off. The sales clerk is still using this
information to check the creditworthiness of the customers. The sales clerk did not
differentiate the new customers from the existing customers and he is using the same
HI5019 T1 2021 Assessment 1: Individual Assignment Page 3 of 9
procedure to check the creditworthiness of the new customers. The customer’s order is
rejected if the customer’s credit is not verified.
The sales order processing is started after the credit verification. In particular, the sales clerk
records the approved standardised sales order in the sales order system through his computer
terminal. A digital copy of the order is distributed to the warehouse and the shipping
department terminals for further processing. The computer system automatically records the
sale in the sales journal. The clerk files the hard copy of the customer order in the sales
department without reviewing the entry. Then, the receipt of the digital sales order prompts
on the computer terminal of the warehouse manager. This digital sales order has the
associated stock release and the shipping notice. These documents play an important role in
the transation processing system. The warehouse manager has access to these documents. For
further processing, the warehouse manager prints out the sales order, the stock release, and
the shipping notice. Using the stock release copy, a warehouse clerk picks the selected items
from the shelves and sends them to the shipping department along with the stock release and
the shipping notice. The warehouse manager then updates the inventory subsidiary ledger
and the general ledger control account from his computer terminal.
The shipping clerk receives the physical stock, the stock release, and the shipping notice from
the warehouse manager. The shipping clerk matches them to the corresponding digital sales
order displayed on his terminal. If everything matches, he prints out three hard copies of the
bill of lading and a packing slip. The shipping clerk sends two copies of the bill of lading and
the packing slip, along with the goods, to the carrier. The stock release copy and the shipping
notice are sent to the
the shipping department. Account receivable clerk receives the stock release and shipping
notice from the shipping clerk. Then, the accounts receivable clerk manually creates a hardcopy invoice, which is immediately mailed to the customer. A
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- answer in text form please (without image)arrow_forwardCamila’s Classic Clothes is a retailer that sells to professional women in the northeast. The firm leases space for stores in upscale shopping centers, and the organizational structure consists of regions, districts, and stores. Each region consists of two or more districts; each district consists of three or more stores. Each store, district, and region has been established as a profit center. At all levels, the company uses a responsibility-accounting system focusing on information and knowledge rather than blame and control. Each year, managers, in consultation with their supervisors, establish financial and nonfinancial goals, and these goals are integrated into the budget. Actual performance is measured each month. The New England Region consists of the Coastal District and the Inland District. The Coastal District includes the New Haven, Boston, and Portland stores. The Coastal District’s performance has not been up to expectations in the past. For the month of May, the district…arrow_forwardAs consultants in advisory services, we are hired by Sayko Corp to help analyze its regional operations in the contiguous U.S. Sayko wishes to draw on our expertise in financial statement analysis to help identify further expansion of operations. Please complete the following based on the information on the map (image): 1. Compute profit margin for each region.2. The company asks us which region it should focus on if it wishes to get the largest net income from each dollar of sales. If we use profit margin to guide our recommendation, which region do we suggest?3. Compute return on total assets for each region.4. The company asks us which region it should focus on if it wishes to get the largest net income from each dollar of assets invested. If we use return on total assets to make our decision, which region do we recommend?arrow_forward
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