Bradmarks Case

Topics: Invoice, Purchase order, Accounting source documents Pages: 5 (1331 words) Published: February 26, 2012
Bradmark Wholesale General Supply
An ACL™ Case Study

Bradmark is a wholesale general supply company that ships to business customers throughout Northeast Pennsylvania, New York state, and Southern Connecticut. Bradmark has developed a competitive edge by offering a wide variety of quality products at competitive prices. The company’s products range from paint to watering cans.

Bradmark is a publicly owned company, whose board of directors has retained your firm to conduct the annual audit. You are the in-charge auditor who is currently examining Bradmark’s revenue and expenditures procedures and related accounts. Bradmark’s main offices are in its Allentown, PA warehouse. The following describes your client’s system configuration and business procedures.

System Overview and Background
Bradmark’s information system is a recently purchased application that runs on a client-server network configuration. James Walker, a systems designer in Bradmark’s IT department, played a central role in implementing and modifying the system to meet Bradmark’s specific needs. Because of Walker’s familiarity with the system, he was asked by top management to temporarily oversee the initial running of the new system to ensure a smooth transition from the old legacy system. After several months, James Walker was offered a promotion to Warehouse Manager and given permanent responsibility for product purchasing.

Sales and Cash Receipts Procedures

The flowchart in Figure 1 and the record layout in Figure 2 (see the related PowerPoint file for figures) illustrate Bradmark’s sales and cash receipts procedures.

Sales Department
Customer orders are received by mail or fax in the sales department. One of the sales staff accesses the customer record and reviews the available credit before creating a Sales Invoice record. For customers with insufficient available credit, the clerk submits the order to the credit manager for approval. If granted, the credit manager verbally authorizes the clerk to increase the customer’s line of credit accordingly. For approved sales, a record is added to the Sales Invoice file. The system automatically assigns an Invoice Number, which is the primary key for the record. The clerk manually enters the remainder of the order data.

Based on input from the sales invoice, the warehouse terminal automatically prints a stock release document, which the warehouse staff uses for picking the goods. The goods are sent to the Shipping Department along with the stock release document. Once the goods have left the warehouse, the clerk confirms to the system the quantity sold and it automatically updates the Quantity on Hand field in the respective inventory record.

Shipping Department
The shipping department receives the goods, prepares them for shipment, selects a carrier and prepares the packing slip and bill of lading (BOL). Once the goods are shipped, the clerk adds a record of the shipment to the Shipping Log file.

At the end of the day the system automatically searches the Sales Invoice and Shipping Log files for items shipped and prepares a hard copy customer invoice, which is mailed to the customer the following morning. The current date is then placed in the Due Date field of the Sales Invoice file.

Cash Receipts
Mary, the cash receipts clerk, receives the customer checks and remittance advises directly from the customer. She records this transaction by entering the Invoice Number (taken from the remittance advice) into the system. The system automatically creates a Cash Receipts record. It assigns a Remittance Number as the primary key and adds this number to a field in the related Sales Invoice record. The Invoice Number from the Sales Invoice is also added to the remittance record as a reference. Mary then manually adds the customer number, amount, and payment date to the Cash Receipts record. At the end of the day she prepares a deposit slip and sends...
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