Case Analysis: 7/20ians Place The Real Model And ER Diagrams

Case Analyses7 20ians Place The Rea Model And E R Diagramsians Pl

Case Analyses 7-20. Ian's Place (The REA Model and E-R Diagrams) Ian's place sells pet supplies to dog and cat owners. To sell its products, the marketing department requires sales personnel to call on the pet store retailers within their assigned geographic territories. Salespeople have an application on their mobile phones that allows them to record sales orders and send these sales orders directly to the company network for updating the company's sales order file. Each day, warehouse personnel review the current sales orders in its file, and where possible, pick the goods and ready them for shipment. (Ian's Place ships goods via common carrier, and shipping terms are generally FOB from the shipping point.) When the shipping department completes a shipment, it also notifies the billing department, which then prepares an invoice for the customer.

Payment terms vary by customer, but most are “net 30.” When the billing department receives a payment, the billing clerk credits the customer's account and records the cash received.

Paper For Above instruction

The assignment requires an analysis of the revenue process at Ian's Place utilizing the REA (Resources, Events, Agents) model, development of an ER diagram, and the design of the corresponding database tables. The goal is to identify all relevant resources, events, and agents involved in the revenue cycle, create a comprehensive ER diagram that visually represents the relationships among these entities, and design normalized tables suitable for implementation in a relational database.

Identification of Resources, Events, and Agents

To accurately model the revenue process at Ian's Place, we first identify the core components based on the REA framework:

Resources

  • Pet supplies (Inventory)
  • Sales orders
  • Shipments
  • Invoices
  • Cash (Payment)
  • Customer accounts

Events

  • Sales Order Entry
  • Order Fulfillment/Shipment
  • Billing/Invoicing
  • Cash Receipt

Agents

  • Sales personnel
  • Warehouse staff
  • Shipping department
  • Billing clerks
  • Cashiers or accounts receivable clerks
  • Customers

Developing the ER Diagram

The ER diagram encompasses these entities and their relationships:

  • Customer places Sales Orders. Each sales order is associated with one customer.
  • Sales Person is responsible for Recording Sales Orders. Each sales order is associated with a sales person.
  • Sales Order is linked to a Shipment, which is initiated by the shipping department when the order is ready.
  • Shipment results in the creation of an Invoice.
  • Invoice records details about the Payment Terms and is linked to cash receipts when payments are received.
  • Cash Receipt updates the Customer Account by recording the payment, especially for accounts with net 30 terms.

The diagram should clearly illustrate foreign keys linking related entities, illustrating one-to-many and many-to-many relationships where applicable, such as customers making multiple orders, each order having multiple shipments over time, and so on.

Designing the Tables

Based on the ER diagram, the following tables are designed:

  1. Customers
    • CustomerID (PK)
    • Name
    • Address
    • Phone
    • PaymentTerms
  2. SalesPersons
    • SalesPersonID (PK)
    • Name
    • Territory
  3. SalesOrders
    • OrderID (PK)
    • CustomerID (FK)
    • SalesPersonID (FK)
    • OrderDate
    • Status
  4. Shipments
    • ShipmentID (PK)
    • OrderID (FK)
    • ShipmentDate
    • Carrier
    • ShippingTerms
  5. Invoices
    • InvoiceID (PK)
    • ShipmentID (FK)
    • InvoiceDate
    • Amount
    • Terms
  6. CashReceipts
    • ReceiptID (PK)
    • InvoiceID (FK)
    • PaymentDate
    • AmountReceived
  7. Resource: Pet Supplies Inventory
    • ItemID (PK)
    • Description
    • QuantityOnHand
    • Price

Handling Many-to-Many Relationships

Relationships such as sales orders containing multiple pet supplies items are managed through associative tables like OrderDetails, which includes:

  • OrderID (FK)
  • ItemID (FK)
  • Quantity
  • UnitPrice

This structure allows flexible and efficient management of multiple items per order and supports inventory tracking.

Conclusion

Applying the REA model to Ian's Place's revenue process involves systematically identifying key resources, events, and agents, creating a coherent ER diagram to visualize relationships, and designing normalized tables for database implementation. This comprehensive approach ensures robust data management, supports operational efficiency, and facilitates accurate financial reporting, aligning with best practices in accounting information systems.

References

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  • Shafer, G., Gamble, P., & Varcoe, R. (2009). OPERATING SYSTEMS AND BILLING APPLICATIONS. Journal of Accounting and Finance, 9(4), 50-60.
  • Gelinas, U. J., Sutton, S. G., Huss, P. J., & Vargus, M. E. (2018). Accounting Information Systems (13th ed.). Cengage Learning.
  • Chandra, A., & Christopher, S. (2008). Building ER diagrams for transactional systems. Journal of Database Management, 19(3), 75-91.
  • Wallace, R. S. O., Nolder, P. M., & Sitlington, T. (2017). Theoretical foundations of accounting models. Accounting Review, 92(4), 115-139.
  • Yen, H., & Liu, C. (2016). Designing database schemas with ER modeling. International Journal of Database Management, 12(1), 45-58.
  • Lymer, A., & Dunsire, G. (2018). Information Systems and Accounting. Routledge.
  • Murphy, P. R., & Mudd, R. (2015). Entity-Relationship toolkits for designing financial information systems. Journal of Systems and Software, 96, 45-55.

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