Locker Rentals Corp LRC operates locker rental services

at several #2709
Locker Rentals Corp. (LRC) operates locker rental services at several locations throughout the
city including the airport, bus depot, shopping malls, and athletics facilities. Unlike some of the
old mechanical lockers that charge a fixed amount per use, LRC’s lockers operate
electronically and are able to charge based on hours of use. The locker system transmits a daily
message to LRC’s office indicating the number of hours that lockers have been used, which the
office man-ager uses to determine when cash should be picked up at each location. LRC’s
cash receipts sys-tem is described below.a. Two employees (“cash collection clerks”) are
responsible for collecting cash from the lockers. Based on instructions from the office manager,
one clerk collects cash from specific locations on the west side of the city and the other collects
from specific locations on the east side.b. When each cash collection clerk returns with the
cash, a supervisor counts the cash and pre-pares a cash count sheet.c. The supervisor
summarizes the cash count sheets in a prenumbered daily cash summary and files the
prenumbered cash count sheets by date.d. The supervisor places the cash in a locked cashbox
until it is taken to the bank for deposit.e. The supervisor, not the cash collection clerks, takes the
cash to the bank for deposit.f. The supervisor prepares a duplicate deposit slip, which the bank
stamps after the deposit is made, to indicate the date and amount of the deposit.g. The
supervisor sends the stamped bank deposit slip and daily cash summary to the accountant, who
compares them before preparing a journal entry debiting Cash and crediting Locker Rental
Revenue.Required:1. For each statement (a)–(g), identify the internal control principle being
applied.2. After several months, LRC’s supervisor is arrested for stealing nearly $ 10,000 from
the company. Identify the internal control weakness that allowed this theft to occur.View
Solution:
Locker Rentals Corp LRC operates locker rental services at several

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