Question

In: Accounting

Krandolph Metals, Inc., is a manufacturer of aluminum cans for the beverage industry. Krandolph purchases aluminum...

Krandolph Metals, Inc., is a manufacturer of aluminum cans for the beverage industry. Krandolph

purchases aluminum and other raw materials from several vendors. The purchasing process at

Krandolph occurs as follows:

When inventory of any raw material seems low, a purchasing agent examines the records to

determine the vendor who supplied the last purchase of that raw material. The purchasing agent

prepares a three

copy PO and mails the top copy to the vendor. One copy is filed in the purchasing

department, and one copy is forwarded to the inventory control department (inventory record

keeping). Inventory control personnel update the inventory subsidiary ledger and file the PO by

number in the inventory control files.

When the goods arrive at the receiving dock, a receiving report is prepared from information on

the packing slip. One copy of the receiving report is filed in the receiving department, and one

copy is forwarded to purchasing so that the purchasing department is informed of the receipt of

goods.

The vendor mails an invoice for the raw materials directly to the accounts payable department.

When the invoice is received, accounts payable personnel prepare a cash disbursement voucher to

approve payment. The voucher is forwarded to the cash disbursements department. The accounts

payable department also updates the accounts payable subsidiary ledger and files the invoice by

invoice number.

Upon receiving the cash disbursement voucher, an employee in the cash disbursements department

prepares a two

copy check. The top copy of the check is mailed to the vendor, and the second copy

is forwarded to the general ledger department. The cash disbursement voucher is stamped “paid”

and returned to the accounts payable department. The voucher is filed with the invoice in the

accounts payable department.

The general ledger department records the check in the general ledger and returns the check copy

to the cash disbursements department, where it is filed.

2. Draw two BPDs to reflect the business processes at Krandolph. One BPD should depict the

purchasing processes, and the second BPD should depict the cash disbursements processes.

Solutions

Expert Solution

According to the given question, Krandolph is a manufacturer of aluminium cans for the beverage industry.

when the store ledger control department founds that the inventory has reached its minimum level, it informs the purchase department who in turn makes the purchases. after identifying the vendor from whom the purchase is to be made the order is placed after considering the minimum days period it would require to reach.

The purchase department makes 3 copy of the purchase order slip.

BDP showing purchasing order:

KRANDOLPH METALS

PURCHASE ORDER

PO NO: DATE:

TO:

M/S:

Your Quotation NO. Date: has been accepted.

Please supply the following items on the terms and conditions indicated below:

item

no.

Material

Code

Description

of items

Quantity

Ordered

Unit of Quantity

Rate Per unit

Amount

Date of Delivery

Date of Delivery:

Mode of Inspection:

Terms of Delivery:

Terms of Payment:

Authorised Signatory

this purchase slip's copy is kept one with PO and mailed to the top vendor. another one with purcchase department and the final with the inventory control department. by this the work of purchase department comes to an end.

When the accounts payable department receives an invoice mail via vendor, it prepares a cash disbursement slip to approve payment. then the voucher is forwarded to cash disbursement department.

The accounts payable department also updates the accounts payable subsidiary ledger and files the invoice by the invoice number.

the employee in the cash disbursement department makes a 2 copy check. one to be send to vendor and the second forwarded to general ledger department.

BDP showing cash disbursement slip:

CASH DISBURSEMENT SLIP

VOUCHER NO.

DATE:

VENDOR:

FOR:

EXPENSE ACCOUNT:

AMOUNT:

LESS CHANGE: (include change return by employee if any)

NET AMOUNT SPENT:

SIGNED BY:

APPROVED BY:

This voucher is filed with the invoice in the accounts payable department.

The general ledger department records the check in the general ledger and returns the check copy to the cash disbursements department, where it is filed.

  

  


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