Fred deals with more than one supplier and often places orders for multiple items at the same time. Fred takes inventory and places orders every Monday. Fred’s suppliers strive to provide outstanding service. Therefore, they never consolidate multiple orders into one shipment, but always ship merchandise the day after receiving an order. Usually, Fred’s suppliers can fill his entire order in one shipment. Occasionally, however, a supplier may be temporarily out of stock of a particular item. In such cases, the supplier ships as much of the order as possible and then ships the out-of-stock item separately as soon as it becomes available. Fred pays for each order in full at one time; that is, he does not make partial payments on orders received. Some suppliers offer discount terms for early payments; Fred always takes advantage of such offers, paying individual invoices, in full, on the appropriate date. Suppliers who do not offer such discounts send Fred monthly statements listing all orders placed the prior month. Fred pays the entire balance indicated on the statement in one check by the specified due date.
Prepare an REA diagram for Fred’s Train Shop’s expenditure cycle.
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