Case 4 Facts – Bebe Co
Bebe Co is a small company that manufactures and sells high-quality blouses. Its
customers are mainly fashion boutiques.
Bebe Co has two directors, one of who is non-executive. The other is involved in the
day-to-day administration of the company. There are ten other employees. Six of these
work in the factory, one works in the warehouse, one is a sales representative and two
are accounts staff. The accounts staff consist of Miss Ines, who is responsible for
processing sales and receivables, and Mrs. Evie, who is the purchases and wages clerk.
Mrs. Evie works part-time, five mornings a week. The company’s sales representative
visits shops throughout the region. He takes orders from customers which he records on
a pre-numbered two-part order form. He passes the completed forms to the accounts
department. Miss Ines files one copy of the order form in numerical sequence and passes
the other to the warehouse.
The completed order is dispatched from the warehouse by the carrier, accompanied by
one copy of a dispatch note. The other copy is sent to Miss Ines, who prepares an
invoice based on the information it contains and on the company’s price list. She sends
one copy of the invoice to the customer, and a second copy of the invoice is retained.
Each Friday, Miss Ines inputs the week’s invoices to the computerized sales ledger. She
then files the invoices alphabetically by customer name. Dispatch notes are not retained
because filing space is limited. Miss Ines opens the post daily and lists remittances
received from credit customers. Every Friday, she inputs the information listed to the
sales ledger. Cheques received are banked daily by the executive director.
Miss Ines reviews the sales ledger balances every month and writes to customers who
have not paid within 90 days of receiving goods. The sales ledger is printed out annually
for year-end purposes. Otherwise, no hard copy is printed, and Miss Ines reviews the
sales ledger on the computer screen. The company’s computer package includes the
facility to produce a sales day book and sales ledger control account. These are not used
because Miss Ines considers that the low volume of transactions (10-15 invoices per
week) makes them unnecessary.
Required:
Please be guided with the following questions in answer the above case study:
(a) State, with reasons, what you consider to be the potential weaknesses in Bebe Co’s
present system of accounting for sales and receivables.
(b) Suggest controls that a small firm such as Bebe Co could feasibly adopt to overcome
the weaknesses you have identified.
Kindly create a recorded video with a 10-minute case study presentation and upload it in the
One drive folder under Case 4.
Please note the following:
1. You have the free will to present your case study, hence more flexible to you. Bare
minimum is to answer the questions in the above case.
2. All are required to present, kindly indicate your name in the video when presenting so
we can identify you during evaluation.
3. This case study will be graded as part of your formative assessment for the final
period.
4. The file can be in any video format (i.e. .mp4, .mov, .dat, etc.).
5. You also need to upload the pdf file of the powerpoint you will use for your recorded
video case study presentation.