Chapter 20, Problem 27DQP

Archer Uniforms, Inc., is a distributor of professional uniforms to retail stores that sell work clothing to professionals, such as doctors, nurses, security guards, etc. Traditionally, most of the sales are to retail stores throughout the United States and Canada. Most shipments are processed in bulk for delivery directly to retail stores or to the corporate office warehouse distribution facilities for retail store chains. In early 2016, Archer Uniforms began offering the sale of uniforms directly to professionals through its company Web site. Professionals can access online information about uniform styles, sizes, and prices. Purchases are applied to the customer’s personal credit card, and the credit card agencies wire funds to Archer’s bank account periodically throughout the month. Management made this decision based on its conclusion that the online sales would tap a new market of professionals who do not have easy access to retail stores. Thus, the volume of shipments to retail stores is expected to remain consistent.

Because Archer’s IT staff lacked the necessary experience to create and support the online sales system, management engaged an information technology consulting firm to design and maintain the online sales system.

Required

Before performing substantive analytical procedures related to the payroll and personnel cycle accounts, develop expectations of how these recent events at Archer Uniforms, Inc., will affect payroll expense for the following departments during 2016 compared to prior years. Indicate the degree (extensive, moderate, little) to which you expect the payroll expense account balance to increase or decrease during 2016.

1. 1. Warehouse and Shipping Department
2. 2. IT Department
3. 3. Accounts Receivable Department
4. 4. Accounts Payable Department
5. 5. Receiving Department
6. 6. Executive Management
7. 7. Marketing