Question

Part I: Create an Entity-Relationship Diagram (ERD) based on the REA Model During an internship with James Merchant, CPA, you were asked to create a database for the firm to help with billing and cash receipts. Merchant employs one staff accountant, a bookkeeper and one intern. Currently, Merchant uses a paper-based system to keep up with customer billing. He feels that he would have better control over the billing and cash receipts if used a computerized system.
Merchant specializes in accounting, tax and consulting, but he occasionally provides special services for his clients. After an engagement, Merchant provides the total number of billable hours to his bookkeeper, who then types up an invoice and sends it to the client. When the client pays the bill, the bookkeeper will stamp the invoice as “PAID” and deposit the check or cash into the bank.
Other information: • Clients typically utilize more than one of Merchant’s services. • An engagement consists of only one type of service. • An engagement may have more than one employee working on it. • A service may be performed on more than one engagement. • Most often an engagement is paid for in full when completed. For engagements that span more than a month or so, clients are typically required to pay a 50% deposit and the end of the first month and the remainder when the work is completed. • Clients can pay for multiple engagements on one check. • Cash receipts are deposited into the main checking account.
Required: Create an ERD (based on the REA model) for James Merchant, CPA’s revenue cycle. The ERD must be completed using a computer application. I recommend PowerPoint as it is easy to manipulate, and all the symbols are available or easy to create

Answer 1

Database for Billing and Cash Receipts for James Merchant: