ELLESO, KATE ANGEL

ACINSY
MAY 28, 2021

DEFINING ENTITIES AND DATA MODELING—SALES ORDER PROCEDURES

Sales Procedures

Customer to the Lotus Tea Importer Company places an order with a sales
representative by phone or fax. The sales department employee then transcribes the
customer order into a standard sales order format and produces the following documents:
three copies of sales orders, a stock release document, a shipping notice, and a packing slip.
The accounting department receives a copy of the sales order, the warehouse receives
the stock release and a copy of the sales order, and the shipping department receives a
shipping notice and packing
slip. The sales clerk files a copy of the sales order in the department. Upon receipt of the
sales order, the accounting department clerk prepares a customer invoice by adding
prices to the sales order, which she obtains from the official price list. She then sends the
invoice to the customer. Using data from the sales order the clerk then records the sale in
the sales journal and in the AR subsidiary ledger. At the end of the day the clerk prepares a
sales journal voucher, which she sends to the general ledger department for posting to the
sales and AR control accounts. The warehouse receives a copy of the sales order and stock
release document. A warehouse employee picks the product and sends it to the shipping
department along with the stock release document. A warehouse clerk then updates the
inventory records to reflect the reduction of inventory on hand. At the end of the day the
clerk prepares a hard-copy inventory account summary and sends it to the general ledger
department for posting to the inventory control and cost of goods sold accounts. Upon
receipt of the stock release document from the warehouse, the shipping clerk prepares the
two copies of a bill of lading. The BOLs and the packing slip are sent with the product to the
carrier. The clerk then files the stock release in the department.

Cash Receipts Procedure

The mail room has five employees who open mail and sort the checks from the
remittance advices. The remittance advices are sent to the accounting department where
the accounting clerk updates the customer AR subsidiary ledger to reflect the reduction in
accounts receivable. At the end of the day the clerk prepares an account summery and
sends it to the general ledger
department for posting. The mail room clerk sends the checks to the cash receipts
department, where a clerk endorses each check with the words ‘‘For Deposit Only.’’ Next,
the clerk records the cash receipts in the cash receipts journal. Finally, the clerk prepares a
deposit slip and sends it and the checks to the bank. 

Required:
Assume that the manual system described is to be automated using a relational
database system. Perform the following tasks. You may need to make assumptions
about how certain automated activities will be performed.

a. List all candidate entities in the procedures described.

The following list is the candidate entities under the first phase of the database design;

Customer Lotus Tea Importer Company and all the

departments under it such as Sales.
Warehouse, shipping department, general
ledger department, etc.

Sales Order Various clerks such as Sales representative,

accounting department clerk, Accounts
Receivable Clerk, etc.

Inventory (product) Stock Release document

Cash Receipts Journal Mail room employees

Bill of Lading Packing Slip

Carrier Invoice (physical)

Deposit Slip Customer Check (physical)

Shipping Notice Inventory Account Summary

Accounts Receivable Summary Remittance Advices

Price List
b. Identify the valid entities and explain why the rejected entities should not be
modeled.
In order to be able to identify valid entities it must meet the following conditions;
Condition 1. An entity must consist of two or more occurrences.
Condition 2. An entity must contribute at least one attribute that is not provided
through other entities
Each entity listed above will be tested in order to eliminate those false entities. The
table bellows shows the valid entities because it had met the two conditions mentioned in
order to be included in database design.

VALID ENTITIES REASONS FOR VALIDITY

CUSTOMER

SALES ORDER

INVENTORY (product)

CASH RECIPTS JOURNAL MEETS CONDITIONS OF

RULES 1 AND 2
BILL OF LADING

CARRIER

DEPOSIT SLIP

SHIPPING NOTICE
 However, the next table will show the rejected entities, thus those entities that do
not qualify as a valid entity, reasons for being a false entity is that might had violated Rules
1 or 2 or both conditions which determines the validity of entity.

REJECTED ENTITIES REASONS FOE REJECTION OF CADIDATE

ENTITY

LOTUS TEA IMPORTER COMPANY (which Violates the condition 1; These department
includes all departments under it like sales, and the company itself is held at single
warehouse, shipping, etc.) occurrences

CLERKS FROM SALES, ACCOUNTING Violate conditions 1 and 2; the problems

DEPARTMENT, ACCOUNTS RECEIVABLE, only suggest one clerk and there is evidence
ETC. entailing the unique attributes of this entity

STOCK RELEASE DOCUMENT This is considered as a user view derived

from the sales order thus violating rule 2
which provides no additional data that
require a separate entity.

MAIL ROOM EMPLOYEES Violates condition 2 which will be assumed

with the same reason with the clerk where
there is not specific data by the system.

PACKING SLIP This is treated as a user view which is

derives from the sales order which violates
condition2.

INVOICE (physical) This is a view – derived from sales order

Violates condition 2

CUSTOMER CHECK (physical) This is a view – used to create record in cash

receipts journal Violates condition 2

INVENTORY ACCOUNT SUMMARY This is a view – Derived from inventory

records. Violates condition 2

REMITTANCE ADVICES This is considered as a view which is

derived from the sales order and sent to the
customer to facilitate posting payments to
the correct customer account
AR ACCOUNT SUMMARY Another user view which is derived from the
Accounts receivable subsidiary and it will
violate condition 2

PRICE LIST Given the limited information in the

problem, this entity may be represented as
either a separate table or more simply as a
field in the inventory record. We assume the
latter in this solution.

c. Create a data model of the process showing entity associations.

The table below are accounting records entities that are not necessary in the
modern database system. Below it will illustrate how each of the accounting records can be
derived from other transactional database tables. The data model shown in the solutions in
parts C and D will include the entities listed.

UNNECESSARY ACCOUNTING RECORDS MAY BE DERIVED AS FOLLOWS

SALES JOURNAL This is equivalent to sales order records

AR SUBSIDIARY LEDGER This is the sum of all sales order records

organized by customer that are still open
(unpaid) at period end

AR CONTROL ACCOUNTS (GL) This is the sum total of all sales order records
that are still open (unpaid) at the period end.

COST OF GOODS SOLD ACCOUNT (GL) Calculated as the quantity sold (sales order) X
the cost of the item taken from the inventory
record

INVENTORY CONTROL (GL) Sum of all inventory records

SALES ACCOUNT (GL) This is sum total sales order records

JOURNAL VOUCHER This is the sum of the transaction detail

captured by the cash receipts records

*AR- ACCOUNTS RECEIVABLE

*GL- GENERAL LEDGER

ENTITY LEVEL ER DIAGRAM

CONTAINS

CASH RECEIPTS DEPOSIT

SENDS

PLACES S
H
I
P
CUSTOMER SALES ORDER P
SALES ORDER
E

O
N
V

V
E
L
I
D
D

BILL OF LADING

PRODUCT

SENT TO
CARRIER
d. Create a fully attributed model by adding primary keys, foreign keys, and data
attributes. Normalize the model.

FULLY ATTRIBUTED AND NORMALIZED ER DIAGRAM

CASH RECEIPTS
DEPOSIT
CR NUMBER
DEPOSIT #
DEPOSIT # (FK) CONTAINS
DEPOSIT DATE
CUSTOMER # (FK)
AMOUNT
CUSTOMER
BANK
BANK ACCOUNT
ACCOUNT ##
CHECK #
DATE RECEIVED
AMOUNT
SENDS

SALES ORDER SHIPPPING

SHIPPPING NOTICE
NOTICE
CUSTOMER
PLACES ORDER NUMBER
SN
SN NUMBER
NUMBER
CUSTOMER # SHIPPED
CUSTOMER
CUSTOMER ## (FK)
(FK) SHIPPING
SHIPPING DATE
DATE
ADDRESS ORDER DATE

O
N
V

V
DELIVER DATE

E
L
TEL. NUMBER

I
LINE
LINE OF
OF CREDIT
CREDIT
CURRENT
CURRENT CREDIT
CREDIT AVAIL
AVAIL
CONTAIN
S

BILL
BILL OF
OF LADING
LADING

LINE
LINE ITEM
ITEM DETAIL
DETAIL BOL
BOL NUMBER
NUMBER

ORDER DATE
ORDER NUMBER
NUMBER DATE
PRODUCT FOB
FOB TERMS
TERMS
PRODUCT NUMBER
NUMBER
PRODUCT
PRODUCT VALUE
VALUE
SHIPPING
SHIPPING DATE
DATE
INCLUDES

PRODUCT
CARRIER SENT
PRODUCT #
TO
CARRIER #
DESCRIPTION
REORDER
REORDER POINT
POINT CARRIER NAME
QUANTITY
QUANTITY ON
ON HAND
HAND
CARRIER
EOQ
ADDRESS
UNIT SALES PRICE CONTACT
CONTACT PERSON
PERSON
UNIT COST OFFICE
OFFICE PHONE
PHONE NUMBER
NUMBER
PERFORMANCE
PERFORMANCE SCORE
SCORE