Appendix 1: Green Mountain Coffee Roasters, Inc.

(Prepared by Lisa McCutchean, Lehigh University)

Green Mountain Coffee Roasters, Inc., was founded in 1981 and began as a small café
in Waitsfield, Vermont, roasting and serving premium coffee. Green Mountain blends
and distributes coffee to a variety of customers, including cafes, delis, and restaurants,
and currently has about 6,700 customer accounts reaching states across the nation. As
the company has grown, several beverages have been added to the product line,
including signature blends, light and heavy roasts, decaffeinated coffee and teas, and
herbal teas. Green Mountain Coffee Roasters, Inc., has been publicly traded since 1993
and had sales in excess of $84 million for the fiscal year ending September 2007.

Green Mountain Coffee has a warehouse and manufacturing plant in Wilton, Vermont,
where it employs 250 full- and part-time workers. The company receives its beans in
bulk from a select group of distributors located across the world, with their largest
supplier being Columbia Beans Co. Green Mountain Coffee also sells accessories that
complement their products, including mugs, thermoses, and coffee containers that they
purchase from their supplier Coffee Lovers Inc. In addition to selling coffee and
accessories, Green Mountain uses paper products such as coffee bags, coffee cups,
and stirrers to distribute to their customers and package the coffee they purchase from
Save the Trees Inc.

Sales Order System

The sales process begins when a customer sends a customer order to the sales clerk.
The sales clerk first does a credit check using the customer sales history records to
authorize the transaction. The sales clerk then prepares a customer copy, a stock
release, two file copies, a packing slip, an invoice, and a ledger copy of the sales order.
The invoice, ledger copy, and a file copy are sent to the billing department. The second
file copy and the stock release are sent to Sara in the warehouse. The billing
department enters all the information from the source documents into the computer,
adds prices, and bills the customer.

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The computer updates the sales journal, and a journal voucher is prepared (at end of
day) and sent to Vic, the general ledger clerk. The file copy is then filed, and the stock
release is sent to Sara in the warehouse. A copy of the invoice is mailed to the
customer, and the ledger copy is sent to the AR clerk in the accounting department.
Sara then uses the stock release to pick the goods from the shelf. A PC-based
inventory system is used to update the inventory subsidiary ledger from the stock
release copy.
The file copy is filed and the stock release is sent to the shipping department. At the end
of the day, Sara prepares a journal voucher, which is sent to the general ledger clerk.
The shipping clerk, who reconciles the stock release along with the packing slip and file
copy, then prepares a bill of lading. The shipping log is updated, and the stock release
and file copy are filed. The bill of lading and packing slip are given to the carrier along
with the goods. In the accounting department, relevant information taken from the
ledger (sent from billing) is entered into the computer to update the AR records. A
summary (end of day) is sent to Vic. The ledger copy is then filed in the accounting
department. Vic reconciles the AR summary with the journal vouchers and updates the
general ledger. All documents are then filed.

Cash Receipts System

The mail room clerk receives the checks and remittance advices from the customer. He
reconciles the checks with the remittance advices and prepares two copies of a
remittance list. The checks and a remittance list are then sent to John, the cash
receipts clerk in the accounting department. John uses a PC to process the cash
receipts, update the cash receipts journal, and prepare a journal voucher and three
deposit slips. The journal voucher is sent to Vic, the general ledger clerk. The checks
and two deposit slips are sent to the bank to be deposited into Green Mountain Coffee’s
account. The third deposit slip and the remittance list are filed. The second remittance
list and the remittance advices are sent to Mary, another cash receipts clerk who, using
a separate PC, updates the AR subsidiary ledger and prepares an account summary,
which is sent to Vic. The remittance list and the remittance advice are then filed. Vic

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uses the journal voucher and the account summary to update the general ledger. These
two documents are then filed.

Purchases System
Currently Green Mountain employs a manual purchases system with minimal computer
technology. Green Mountain Coffee purchases beans and blends from other companies
and then sells them to other stores. Inventory fluctuates with respect to sales of blends
to stores. Sara is in charge of inventory management in the warehouse. From her PC,
she reviews the inventory ledger to identify inventory needs. When items fall to their
pre-established reorder point, she prepares a purchase requisition. She keeps a copy
in her department for use later, files one in the open purchase requisition file, and sends
a copy to AP. At the end of the day, she uses the purchase requisition to prepare a four-
part PO. One copy is filed, two are sent to the supplier, and one is sent to Fayth in the
AP department. When the goods arrive, Sara inspects and counts them and sends the
packing slip to AP.
Using a PC, Sara updates the inventory subsidiary ledger and, at the end of day, sends
an account summary to Vic in the general ledger department. After checking that the
purchase requisition and PO exist to support the packing slip, Fayth files the documents
in the AP pending file. The supplier’s invoice is mailed directly to Fayth, who checks it
against the documents in the pending file. Using a computer system, she updates the
AP subsidiary ledger and records the transaction in the purchases journal. She then
files the purchase requisition, PO, packing slip, and invoice in the open AP file. At the
end of the day, she prepares a journal voucher, which is sent to Vic in the general
ledger department. Using a separate computer system, Vic updates the control
accounts affected by the transactions and files the summary and journal vouchers.

Cash Disbursements System Summary

Fayth reviews the open AP file for items due for payment, waiting until the last date to
make a payment and still take advantage of the discount. From her PC, she then
updates (closes) the appropriate AP subsidiary record, prints a two-part check, and
records the payment in the check register file. At the close of day, Fayth mails the check

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to the supplier, files a copy, and prepares a journal voucher, which goes to Vic. Vic
records the transaction in the affected general ledger accounts and files the journal
voucher.

Payroll System
In the Green Mountain production departments, each worker records the number of
hours they have worked on a time card each day. The supervisor, Toni Holland, is
responsible for watching employees clock in and sending the time cards to the payroll
department. Using a stand-alone microcomputer, the payroll department clerk inputs the
time cards to prepare hard copies of the paychecks and post to employee records. The
time cards are filed in payroll, and the employee checks are given to Toni to review and
distribute.
The payroll department also prepares three copies of a payroll register. Copies one and
two are sent to AP and the general ledger department, respectively, and the third copy
is filed in payroll. AP uses the payroll register to write a check for the imprest account.
One copy of the check is signed and sent to the bank, and the other copy is filed. The
general ledger department clerk inputs the payroll register information into a stand-
alone microcomputer to post to the payroll clearing account and update the general
ledger control accounts. The payroll register is then filed.

Fixed Asset System

Asset acquisition begins when the departmental manager (the user) recognizes the
need to obtain a new or replace an existing fixed asset. The user prepares two copies of
a purchase requisition, filing one copy in the user department and sending one copy to
the purchasing department. The purchasing department uses the purchase requisition
to prepare three copies of a purchase order. One is sent copy of the purchase order is
sent to the supplier, one is sent to the AP department, and the last copy is filed in
purchasing with the purchase requisition. AP receives the goods along with an invoice
and a packing slip from the vendor. The AP clerk reconciles the purchase order sent
from purchasing on a stand-alone microcomputer with the packing slip and invoice. The
clerk uses the information to post a liability, update the purchases journal, and print hard

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copies of the journal voucher and cash disbursements voucher. The journal voucher is
sent to the general ledger department, and the cash disbursements voucher is sent to
the cash disbursements department with the supplier’s invoice. There remaining
documents, the purchase order and the packing slip, are filed in AP. The cash
disbursements clerk uses a stand-alone microcomputer to prepare and post a check to
the check register using the information contained in the supplier’s invoice and the cash
disbursements voucher. The clerk then prints a hard copy of the check to send to the
vendor. The cash disbursements voucher is then sent to the general ledger
department. The user department manager handles the asset maintenance and
disposal. The manager adjusts the fixed asset subsidiary account balances as the
assets depreciate over time and when an asset has reached the end of its useful life (in
which case a disposal report is prepared). The user sends a summary to the general
ledger. The general ledger department clerk reconciles the cash disbursements
voucher, the journal voucher, and the fixed asset summary from the user with a stand-
alone microcomputer, posts to the general ledger accounts, and files the remaining
documents.