Expenditure Cycle for Bob’s bicycle shop In order for Bob to sell bicycles and bicycle accessories, he first needs to have inventory to sell. Thus, as part of his overall engagement, Paul Stone has also prepared an REA model for the expenditure cycle of Bob’s bicycle shop. The following paragraph describes the expenditure cycle business processes of Bob’s bicycle shop:

Bob deals with more than one supplier and often places orders for multiple items at the same time. Bob takes inventory and places orders every Monday. Bob’s suppliers strive to provide outstanding service. Therefore, they never consolidate multiple orders into one shipment, but always ship merchandise the day after receiving an order. Usually, Bob’s suppliers can fill his entire order in one shipment. Occasionally, however, a supplier may be temporarily out of stock of a particular item. In such cases, the supplier ships as much of the order as possible and then ships the out-of-stock item separately as soon as it becomes available. Bob pays for each order in full at one time; that is, he does not make partial payments on orders received. Some suppliers offer discount terms for early payments; Bob always takes advantage of such offers, paying individual invoices, in full, on the appropriate date. Suppliers who do not offer such discounts send Bob monthly statements listing all orders placed the prior month. Bob pays the entire balance indicated on the statement in one check by the specified due date.

REQUIRED 

Prepare an REA diagram for Bob’s bicycle expenditure cycle.