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SYSTEM IMPLEMENTATION AND TRANSACTION PROCESSING PROJECT (300 points) Marys SunS

SYSTEM
IMPLEMENTATION AND
TRANSACTION
PROCESSING PROJECT (300 points)
Marys SunShine POOL
BACKGROUND
The objectives of this
project are as follows:

To
reinforce your learning the AIS concepts presented in class

To
experience a transaction processing application

To see
the composition of the fields on different tables, such as the fields contained
in the general ledger table, the accounts receivable table, etc.

To see
the advantages of the automated features contained in an accounting information
system, such as the automatic posting of transactions

To
demonstrate on-line computer controls such as field edits, reasonableness
checks, etc.

To see
the interfaces between sub-systems and the general ledger and increase your
ability to track information into the financial reports

To
experience implementing an accounting system

To
practice project planning with an inflexible deadline

To
experience an extensive, multi-part project completed as a team.
REQUIREMENTS
Assume
that Marys Sunshine Pool Incorporated has hired you as a consultant to analyze
the controls in its existing system and to implement a computerized accounting
system. The present accounting system is entirely manual. The new system will
be an accounting software package that runs on a microcomputer.

Requirement

Points

1.

Prepare a project plan in Gantt chart format showing
how you and your partner completed the project

20

2.

Prepare a system flowchart of Marys Sunshine Pool
Companys transaction processing under the manual system as described in this
handout

50

3.

Perform the company set up and process transactions for
the company. Print reports.

130

4.

Prepare a one-page memo to the company
owners.

75

Total task points

275

50 Participation points-to split between your
partnership

case materials
MARYS SUNSHINE POOL INCORPORATED
4000
Chastain Road
Anywhere, XX 12345
Federal
Tax ID: 444-43-5513
COMPANY BACKGROUND
Marys
Sunshine Pool Incorporated is a merchandising firm that sells various pool
supplies, e.g., chemicals, diving boards, pumps, ladders, poolside furniture,
pool games, floating loungers. At
present, Marys Sunshine has a manual accounting system; however, the company
has hired you to implement an accounting program to be used on a personal
computer as of July 1, the beginning of the current fiscal year. Mary and Ed, the stockowners of the company,
have made available to you the balance sheet and data from the subsidiary
ledgers for the fiscal year ended June 30.
As of
June 30, Marys Sunshine Pool Company consisted of a showroom and an office in
one building, a distribution center in another building, and five
employees. The employees are: Lauren
Allen, a salesperson at the showroom, Paul Barton and Ernest Callahan,
traveling salesmen, and Fred and Ted Hill, Mary and Eds twin sons who work at
the distribution center only during the summer months.
Marys
Sunshine Pool Incorporated owns the land, the showroom/office building, the
distribution center building, a delivery truck and two automobiles driven by
the traveling salesmen.
REVENUE TRANSACTION PROCESS
Sales
are made to users of pool supplies. Pool
supplies are displayed and orders for products are taken in the
showroom. The traveling salesmen also take orders. The distribution
center is located on the
same lot as the showroom/office building.
It is here that the orders are filled and shipped.
Order Processing
All
sales are credit sales, which are subject to the approval of Ed. Ed approves
credit based on his “gut” feeling for each individual case and on the
opinions of his bowling buddies.
Generally, Ed wants to make the sales and few orders are not
approved. In the few cases where Ed does
not approve the credit, he marks his copy of the sales order accordingly. He makes one copy of all of the disapproved
orders and two copies of the approved orders.
He sends the one copy of both the approved and disapproved orders and
all of the original orders to Mary. He
sends a copy of the approved orders to the twins so they can fill them.
Mary
prepares a report for each salesperson listing both the sales orders turned
down for credit and the approved sales and sends the reports along with the
marked approved and disapproved sales order to the salespeople. The salespeople notify customers of
disapproved credit and then throw the reports and sales orders in their car
trunks or wastebaskets. Mary files the
copies of the approved orders until a shipping notice is received. Mary throws the copies of the disapproved
orders away.

Shipping
Out of
town orders are shipped common carrier FOB Destination. Recently, Ed had a brief meeting with the
twins about the possibility of sending the bulk of freight shipments through
one common carrier, Iron Rooster Trucking Company. The advantage to Marys Sunshine would be a
rebate paid quarterly of up to 15% of freight charges. Based on prior years’ business, this rebate
would total in excess of $15,000 per year.
Without giving this practice much thought, Ed told the twins to begin
using Iron Rooster as much as possible.
The
twins take all of the approved orders, find and box the merchandise and prepare
a bill of lading for the carrier. The
twins send their copy of the sales order marked “shipped” and a copy
of the bill of lading to Mary.
After
an order has been shipped, the twins update the inventory cards to keep an
accurate record of items on hand.
At the
end of the week, all of the inventory cards are reviewed and a weekly inventory
report is prepared.
Accounts Receivable
Mary
matches the sales order marked “shipped to her copy of the sales
order. She then prepares a two-part
invoice and mails the original to the customer.
She records the sales in the sales journal and the receivables in the
subsidiary ledger. Mary files by date
her copy of the invoice with her copy of the sales order and the shipping
documents.
During
the summer season, Marys Sunshine often has difficulty in shipping customer
orders in a timely manner. Supplier
delays in delivery to Marys Sunshine and increased volume cause delays in
outgoing shipments. At the end of some
months, Mary prepares and mails customer invoices ahead of actual
shipment. She claims this practice more
closely matches revenues and expenses.
As usual, Mary records the sales in the sales journal and in the
accounts receivable subsidiary ledger.
Once
per month, Mary prepares a listing of delinquent customers that she sends to
the salespeople. They are responsible
for collecting the overdue amounts.
Cash Receipts
Mary
opens the mail each day; sorts the cash receipts and the vendor invoices to be
paid and logs them in the appropriate logs.
Mary records the receipts on customers account in the cash receipts
journal and in the accounts receivable subsidiary ledger. After recording all the cash receipts, she
prepares a deposit slip and takes the cash to the bank.
DISBURSEMENT PROCESS
Purchasing
Every
Friday afternoon, the salespeople prepare weekly sales reports from their
copies of the sales orders. They send
the reports to Ed and then file their sales orders by customer name. Ed reviews the weekly sales reports and the
weekly inventory reports prepared by Fred and Ted. Ed “eyeballs” the numbers, notes
any shortages in inventory, and prepares 3-part purchase orders. He mails the original to the vendor, sends
one to the twins in the distribution center and one copy to Mary.
As
noted above, Fred and Ted have a card file for keeping track of inventory. Each card has a running balance to expedite
the preparation of the weekly inventory reports for Ed. When they receive a copy of a purchase order,
they pull the cards for the item(s) ordered, record the quantity ordered and
the P.O. number, and file the purchase order in numerical order. When the shipment arrives, Fred and Ted pulls
the purchase order to make sure that the items received were the items ordered
and note any back orders on the purchase order.
Then they pull the inventory cards, mark the items received, and prepare
a receiving report that is sent to Mary.
Cash Disbursements
As
noted above, Mary opens the mail and separates and logs the cash receipts and
the invoices to be paid. Invoices are filed in alphabetical order by due
date. Each Thursday, Mary pulls the
invoices that are due that week and types three-part checks. The checks, along with the invoices, are
given to Ed for his approval and signature.
After Ed signs the checks, Mary mails the original, files the second
copy in check number order, and attaches the third copy to the invoice. She then enters the check in the cash
disbursement journal and the accounts payable subsidiary ledger. The third copy of the check and the attached
invoice are filed alphabetically by vendor name.
Payroll
A full service
payroll processing company called Payroll Paid Promptly (PPP) processes
payroll. PPP charges a fee of 10% of the
gross payroll for the payroll service. PPP
calculates the payroll, creates and mails the checks to the employees and
remits all payroll taxes and other withholdings to the appropriate
locations. PPP drafts the cash needed
for payroll disbursements and their fee directly from Marys Pool checking
account. They send Mary a report once per month reflecting the transactions
made on behalf of Marys Pool. Mary
prepares a journal entry to reflect the payroll and updates the general
ledger.
The employees, who are
paid once a month, are as follows:
Lauren Allen, a
salesperson at the showroom
Paul Barton and Ernest
Callahan, traveling salesmen
Fred and Ted Hill, twins
who work at the distribution center
End of Month
At the end of the month Mary makes adjusting journal
entries based on her memory of the previous transactions and by consulting the
prior months balance sheet. She also
prepares and mails statements to customers.

PROJECT DETAILS
Project Plan
Determine the tasks that you will perform to complete the
project

Determine how your team will complete the tasks

Prepare a Gantt chart with time and dates
indicated

Prepare a final Gantt chart showing when the
tasks were competed and how many hours each task took compared to your planned
hours.
Hint: think carefully about how you want to complete the tasks and how
much you trust your partner to get his/her portion of the project done.
Hint: consult lecture notes (Powerpoint) for an example of a Gantt
chart
Prepare a system flowchart
Follow the flowcharting guidelines in your textbook
and as we have discussed in class. SEE PAGE 124 (FLOWCHART GUIDELINE 4) FOR USE OF OFF PAGE CONNECTORS.
The final copy of the flowchart should be prepared
using flowcharting software or Microsoft office.
Hint: It is usually the easiest to set up the flowchart with a
page for each entity.
Set up Company and process transactions
Configure
Company (Set Up Information)
You need to start by creating a new
company for the business. Read through
the entire case before you start setting up your company.
Note: given that this is a class
project, the company name should be your names.
Complete the company information making up information as you see fit.
The proper date
to start recording the transactions is 7/1.
The fiscal year is 7/1/CY through 06/30/NY.
You will be
establishing the chart of accounts, the vendors, the customers and the
inventory and service products. As part
of your configuration, you need to decide the coding schemes that will be used
for each of these data files. Also, to
save yourself time, carefully set up the default information for customers, vendors,
and inventory items.
The company uses
one checking account. The business has
used prenumbered invoices and checks in the past. However, given that they need to purchase new
forms to accommodate the new software they plan to restart their numbering
sequences at 1.
Given the small
size of the company and the lack of available accounting expertise, the company
has decided to outsource payroll to a company specializing in payroll
services. This company provides a
monthly report upon which to base the payroll journal entries.
Further, given
the small size of the company and the lack of systems experience the new system
will be implemented without using e-commerce.

Note: Be very careful working
through the company set up options, this is where you establish how your
company will function. If you get it
wrong to start, it will affect all later transactions and reporting.
Implement
a chart of accounts
Packaged software usually comes with several chart
of accounts templates. When setting up
your company, you should select a standard chart of accounts for the industry
and type of product you will be selling.
Then go through the chart of accounts and modify it to suit this
business. After you have modified the
accounts, use the balance sheet provided in Appendix A to load the beginning balances
using a Journal Entry.
Load
beginning balances
You also need
to set up the account balances for the customers, vendors and inventory. The appropriate balances are given in the
subsidiary ledgers for customers (Appendix B), vendors (Appendix C), and inventory
products (Appendix D).
Inventory
Inventory items are
shown in appendix D. The company would
like to use the perpetual weighted average cost method to value inventory. There are two applicable price levels for the
company: normal pricing and governmental pricing (the government entities get a
2% discount).
Note: Set up your
price levels (discounts) before you set up your customers.
Customers
All products
are subject to state sales tax. The
state sales tax rate is 5%. The open
invoice method is used for all customers.
Governmental customers get a preferred price (2% discount). In addition, Governmental customers do not
pay sales tax. The ship-to and billing
address are the same for all the customers.
You should assume some reasonable information for any data fields that
you feel are critical, but for which information is not provided. Statements are prepared and sent to each
customer at the end of each month.
APPENDIX
B provides information for the customer subledgers.
Vendors
The only trade accounts
payable with outstanding balances at this time are shown in APPENDIX C. The credit terms for all trade creditors are
Net 30 and all product purchases are exempt from sales tax. You should assume some reasonable information
for the required fields. Additional
vendors will be established as invoices are received for payment.
Process
transactions
Record the transactions for Marys Sunshine
listed on the transaction list for July (See Appendix E)

Prepare Memo: Analyze the business
Prepare a one-page
memo to Marys Sunshines proprietor summarizing your opinions on
their business and suggest ideas for improving it. The memo should be the last thing that you do
and will be based on the previous project outputs such as the income statement,
cash flow statement and balance sheet.
Hint: use memo format (to:, from:, subject, etc.). Remember memos must be easy to read. Grammar counts.
Hint: You may want to use some of the ratios
that you learned in intermediate accounting.SYSTEM
IMPLEMENTATION ANDTRANSACTION
PROCESSING PROJECT (300 points)Marys SunShine POOLThe objectives of this
project are as follows:
To
reinforce your learning the AIS concepts presented in class
To
experience a transaction processing application
To see
the composition of the fields on different tables, such as the fields contained
in the general ledger table, the accounts receivable table, etc.
To see
the advantages of the automated features contained in an accounting information
system, such as the automatic posting of transactions
To
demonstrate on-line computer controls such as field edits, reasonableness
checks, etc.
To see
the interfaces between sub-systems and the general ledger and increase your
ability to track information into the financial reports
To
experience implementing an accounting system
To
practice project planning with an inflexible deadline
To
experience an extensive, multi-part project completed as a team.Assume
that Marys Sunshine Pool Incorporated has hired you as a consultant to analyze
the controls in its existing system and to implement a computerized accounting
system. The present accounting system is entirely manual. The new system will
be an accounting software package that runs on a microcomputer.RequirementPoints1.Prepare a project plan in Gantt chart format showing
how you and your partner completed the project202.Prepare a system flowchart of Marys Sunshine Pool
Companys transaction processing under the manual system as described in this
handout503.Perform the company set up and process transactions for
the company. Print reports.1304.
Prepare a one-page memo to the company
owners.75Total task points27550 Participation points-to split between your
partnershipMARYS SUNSHINE POOL INCORPORATED4000
Chastain RoadAnywhere, XX 12345Federal
Tax ID: 444-43-5513COMPANY BACKGROUNDMarys
Sunshine Pool Incorporated is a merchandising firm that sells various pool
supplies, e.g., chemicals, diving boards, pumps, ladders, poolside furniture,
pool games, floating loungers. At
present, Marys Sunshine has a manual accounting system; however, the company
has hired you to implement an accounting program to be used on a personal
computer as of July 1, the beginning of the current fiscal year. Mary and Ed, the stockowners of the company,
have made available to you the balance sheet and data from the subsidiary
ledgers for the fiscal year ended June 30.As of
June 30, Marys Sunshine Pool Company consisted of a showroom and an office in
one building, a distribution center in another building, and five
employees. The employees are: Lauren
Allen, a salesperson at the showroom, Paul Barton and Ernest Callahan,
traveling salesmen, and Fred and Ted Hill, Mary and Eds twin sons who work at
the distribution center only during the summer months.Marys
Sunshine Pool Incorporated owns the land, the showroom/office building, the
distribution center building, a delivery truck and two automobiles driven by
the traveling salesmen. REVENUE TRANSACTION PROCESSSales
are made to users of pool supplies. Pool
supplies are displayed and orders for products are taken in the
showroom. The traveling salesmen also take orders. The distribution
center is located on the
same lot as the showroom/office building.
It is here that the orders are filled and shipped. Order ProcessingAll
sales are credit sales, which are subject to the approval of Ed. Ed approves
credit based on his “gut” feeling for each individual case and on the
opinions of his bowling buddies.
Generally, Ed wants to make the sales and few orders are not
approved. In the few cases where Ed does
not approve the credit, he marks his copy of the sales order accordingly. He makes one copy of all of the disapproved
orders and two copies of the approved orders.
He sends the one copy of both the approved and disapproved orders and
all of the original orders to Mary. He
sends a copy of the approved orders to the twins so they can fill them.Mary
prepares a report for each salesperson listing both the sales orders turned
down for credit and the approved sales and sends the reports along with the
marked approved and disapproved sales order to the salespeople. The salespeople notify customers of
disapproved credit and then throw the reports and sales orders in their car
trunks or wastebaskets. Mary files the
copies of the approved orders until a shipping notice is received. Mary throws the copies of the disapproved
orders away.ShippingOut of
town orders are shipped common carrier FOB Destination. Recently, Ed had a brief meeting with the
twins about the possibility of sending the bulk of freight shipments through
one common carrier, Iron Rooster Trucking Company. The advantage to Marys Sunshine would be a
rebate paid quarterly of up to 15% of freight charges. Based on prior years’ business, this rebate
would total in excess of $15,000 per year.
Without giving this practice much thought, Ed told the twins to begin
using Iron Rooster as much as possible.The
twins take all of the approved orders, find and box the merchandise and prepare
a bill of lading for the carrier. The
twins send their copy of the sales order marked “shipped” and a copy
of the bill of lading to Mary.After
an order has been shipped, the twins update the inventory cards to keep an
accurate record of items on hand.At the
end of the week, all of the inventory cards are reviewed and a weekly inventory
report is prepared.Accounts ReceivableMary
matches the sales order marked “shipped to her copy of the sales
order. She then prepares a two-part
invoice and mails the original to the customer.
She records the sales in the sales journal and the receivables in the
subsidiary ledger. Mary files by date
her copy of the invoice with her copy of the sales order and the shipping
documents.During
the summer season, Marys Sunshine often has difficulty in shipping customer
orders in a timely manner. Supplier
delays in delivery to Marys Sunshine and increased volume cause delays in
outgoing shipments. At the end of some
months, Mary prepares and mails customer invoices ahead of actual
shipment. She claims this practice more
closely matches revenues and expenses.
As usual, Mary records the sales in the sales journal and in the
accounts receivable subsidiary ledger.Once
per month, Mary prepares a listing of delinquent customers that she sends to
the salespeople. They are responsible
for collecting the overdue amounts.Cash ReceiptsMary
opens the mail each day; sorts the cash receipts and the vendor invoices to be
paid and logs them in the appropriate logs.
Mary records the receipts on customers account in the cash receipts
journal and in the accounts receivable subsidiary ledger. After recording all the cash receipts, she
prepares a deposit slip and takes the cash to the bank.Every
Friday afternoon, the salespeople prepare weekly sales reports from their
copies of the sales orders. They send
the reports to Ed and then file their sales orders by customer name. Ed reviews the weekly sales reports and the
weekly inventory reports prepared by Fred and Ted. Ed “eyeballs” the numbers, notes
any shortages in inventory, and prepares 3-part purchase orders. He mails the original to the vendor, sends
one to the twins in the distribution center and one copy to Mary.As
noted above, Fred and Ted have a card file for keeping track of inventory. Each card has a running balance to expedite
the preparation of the weekly inventory reports for Ed. When they receive a copy of a purchase order,
they pull the cards for the item(s) ordered, record the quantity ordered and
the P.O. number, and file the purchase order in numerical order. When the shipment arrives, Fred and Ted pulls
the purchase order to make sure that the items received were the items ordered
and note any back orders on the purchase order.
Then they pull the inventory cards, mark the items received, and prepare
a receiving report that is sent to Mary.As
noted above, Mary opens the mail and separates and logs the cash receipts and
the invoices to be paid. Invoices are filed in alphabetical order by due
date. Each Thursday, Mary pulls the
invoices that are due that week and types three-part checks. The checks, along with the invoices, are
given to Ed for his approval and signature.
After Ed signs the checks, Mary mails the original, files the second
copy in check number order, and attaches the third copy to the invoice. She then enters the check in the cash
disbursement journal and the accounts payable subsidiary ledger. The third copy of the check and the attached
invoice are filed alphabetically by vendor name. PayrollA full service
payroll processing company called Payroll Paid Promptly (PPP) processes
payroll. PPP charges a fee of 10% of the
gross payroll for the payroll service. PPP
calculates the payroll, creates and mails the checks to the employees and
remits all payroll taxes and other withholdings to the appropriate
locations. PPP drafts the cash needed
for payroll disbursements and their fee directly from Marys Pool checking
account. They send Mary a report once per month reflecting the transactions
made on behalf of Marys Pool. Mary
prepares a journal entry to reflect the payroll and updates the general
ledger.The employees, who are
paid once a month, are as follows:Lauren Allen, a
salesperson at the showroomPaul Barton and Ernest
Callahan, traveling salesmenFred and Ted Hill, twins
who work at the distribution centerEnd of MonthAt the end of the month Mary makes adjusting journal
entries based on her memory of the previous transactions and by consulting the
prior months balance sheet. She also
prepares and mails statements to customers.
Determine the tasks that you will perform to complete the
project
Determine how your team will complete the tasks
Prepare a Gantt chart with time and dates
indicated
Prepare a final Gantt chart showing when the
tasks were competed and how many hours each task took compared to your planned
hours.Hint: think carefully about how you want to complete the tasks and how
much you trust your partner to get his/her portion of the project done.Hint: consult lecture notes (Powerpoint) for an example of a Gantt
chart Follow the flowcharting guidelines in your textbook
and as we have discussed in class. SEE PAGE 124 (FLOWCHART GUIDELINE 4) FOR USE OF OFF PAGE CONNECTORS. The final copy of the flowchart should be prepared
using flowcharting software or Microsoft office.Hint: It is usually the easiest to set up the flowchart with a
page for each entity.You need to start by creating a new
company for the business. Read through
the entire case before you start setting up your company.Note: given that this is a class
project, the company name should be your names.
Complete the company information making up information as you see fit.The proper date
to start recording the transactions is 7/1.
The fiscal year is 7/1/CY through 06/30/NY.You will be
establishing the chart of accounts, the vendors, the customers and the
inventory and service products. As part
of your configuration, you need to decide the coding schemes that will be used
for each of these data files. Also, to
save yourself time, carefully set up the default information for customers, vendors,
and inventory items.The company uses
one checking account. The business has
used prenumbered invoices and checks in the past. However, given that they need to purchase new
forms to accommodate the new software they plan to restart their numbering
sequences at 1.Given the small
size of the company and the lack of available accounting expertise, the company
has decided to outsource payroll to a company specializing in payroll
services. This company provides a
monthly report upon which to base the payroll journal entries.Further, given
the small size of the company and the lack of systems experience the new system
will be implemented without using e-commerce.
Note: Be very careful working
through the company set up options, this is where you establish how your
company will function. If you get it
wrong to start, it will affect all later transactions and reporting.Packaged software usually comes with several chart
of accounts templates. When setting up
your company, you should select a standard chart of accounts for the industry
and type of product you will be selling.
Then go through the chart of accounts and modify it to suit this
business. After you have modified the
accounts, use the balance sheet provided in Appendix A to load the beginning balances
using a Journal Entry.You also need
to set up the account balances for the customers, vendors and inventory. The appropriate balances are given in the
subsidiary ledgers for customers (Appendix B), vendors (Appendix C), and inventory
products (Appendix D).InventoryInventory items are
shown in appendix D. The company would
like to use the perpetual weighted average cost method to value inventory. There are two applicable price levels for the
company: normal pricing and governmental pricing (the government entities get a
2% discount).Note: Set up your
price levels (discounts) before you set up your customers.CustomersAll products
are subject to state sales tax. The
state sales tax rate is 5%. The open
invoice method is used for all customers.
Governmental customers get a preferred price (2% discount). In addition, Governmental customers do not
pay sales tax. The ship-to and billing
address are the same for all the customers.
You should assume some reasonable information for any data fields that
you feel are critical, but for which information is not provided. Statements are prepared and sent to each
customer at the end of each month.APPENDIX
B provides information for the customer subledgers.VendorsThe only trade accounts
payable with outstanding balances at this time are shown in APPENDIX C. The credit terms for all trade creditors are
Net 30 and all product purchases are exempt from sales tax. You should assume some reasonable information
for the required fields. Additional
vendors will be established as invoices are received for payment.Record the transactions for Marys Sunshine
listed on the transaction list for July (See Appendix E)Prepare a one-page
memo to Marys Sunshines proprietor summarizing your opinions on
their business and suggest ideas for improving it. The memo should be the last thing that you do
and will be based on the previous project outputs such as the income statement,
cash flow statement and balance sheet.Hint: use memo format (to:, from:, subject, etc.). Remember memos must be easy to read. Grammar counts.Hint: You may want to use some of the ratios
that you learned in intermediate accounting.

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