Page 59 - AIS access_chang_ingraham

SALES/COLLECTION PROCESS OVERVIEW 57

one of the follow'ing custom extras: a pinline stripe for $20, a colored competition stripe
for $40, color lamination (tint or opaque) for $40, cloth design for $50, airbrush finish for
$25, gloss and polish for $45, or an extra lO-oz. Volan glass layer for $25. (Note that in
reality customers would probably add more than one of these custom extras. We have lim-
ited it to one custom extra per order for simplicity's sake.) It is extremely rare that a cus-
tomer does not customize his or her surfboard. Tragg's stores the information on extra fea-
tures in a separate table.
When orders come in (custom orders or otherwise), a Sales Invoice form is com-
pleted. All sales are final; there are no returns allowed. As a result, the sales order is the
sales invoice. (For simplicity of this example, we will assume that no sales tax is charged.
In reality, sales tax would be charged on all in-store sales and Internet sales made to
California residents.)
Customers must arrange to pick up the surfboards in the store or have them shipped.
Final payment is due when the surfboard is picked up or before it is shipped. In addition,
some customers may pay for several transactions at once (i.e., write one check for several
invoices).
Although Tragg's maintains several bank accounts (one general checking account,
one payroll account, and one savings account), most of the cash receipts and cash dis-
bursements are handled through the general checking account. Most cash receipts come
from sales. However, Tragg's does have a few investments that result in dividend income
and are deposited in the general checking account.
According to the descriptions on Tragg's business processes in the revenue cycle,
Figure 4-1 is an REA diagram created to model the business activities for Tragg's.

Resource Event Agent

r - - - - - - - - -I
( 0 N) 1 1
Inventory , 1 Sales Clerk:
1 1
1 1
1 1
Sales

Extras

(0, N)

Cash (1,N) (1,1)
(Bank Inflow ;--~ Cash Receipt
Account) .----------.
(0, N): :
Cashier 1
1 1
1._-- 1 1
1
FIGURE 4-1 Basic REA Diagram for Tragg's Custom Surfboards Revenue Cycle