Jem Clothes, Inc., is a 25-store chain concentrated in the northeastern United States that sells ready-to-wear clothes
Jem Clothes, Inc., is a 25-store chain concentrated in the northeastern United States that sells ready-to-wear clothes for young men and women. Each store has a full- time manager and an assistant manager, both of whom are paid a salary. The cashiers and sales personnel are typically young people working part-time who are paid an hourly wage plus a commission based on sales volume. The accompanying flowchart for Problem 5 depicts the flow of a sales transaction through the organization of a typical store. The company uses unsophisticated cash registers with four-part sales invoices to record each transaction. These sales invoices are used regardless of the payment type (cash, check, or bank card).
On the sales floor, the salesperson manually records his or her employee number and the transaction (clothes, class, description, quantity, and unit price), totals the sales invoice, calculates the discount when appropriate, calculates the sales tax, and prepares the grand total. The salesperson then gives the sales invoice to the cashier, retaining one copy in the sales book.
The cashier reviews the invoice and inputs the sale. The cash register mechanically validates the invoice, automatically assigning a consecutive number to the transaction. The cashier is also responsible for getting credit approval on charge sales and approving sales paid by check. The cashier gives one copy of the invoice to the customer and retains the second copy as a store copy and the third for a bank card, if a deposit is needed. Returns are handled in exactly the reverse manner, with the cashier issuing a return slip.
At the end of eh day, the cashier sequentially orders the sales invoices and takes cash register totals for cash, hank card, and check sales, and cash and hank card returns. These totals are reconciled by the assistant manager to the cash register tapes, the total of the consecutively numbered sales invoices, and the return slips. The assistant manager prepares a daily reconciliation report for the store managerâ€™s review.
The manager reviews cash, check, and bank card sales and then prepares the daily bank deposit (bank card sales invoices are included in the deposit). The manager makes the deposit at the bank and files the validated deposit slip.
The cash register tapes, sales invoices, and return slips are forwarded daily to the central data processing department at corporate headquarters for processing. The data processing department returns a weekly sales and commission activity report to the manager for review.
a. Identify six strengths in the Jem Clothes system for controlling sales transactions.
b. For each strength identified, explain what problem(s) Jem Clothes has avoided by incorporating the strength in the system for controlling sales transactions.
Use the following format in preparing your answer.
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