First Problem

A cashier’s booth is located near the entrance to the theater. Two cashiers were
employed. One work from 1:00 to 5:00 pm and the other from 5:00 to 9:pm. Each
cashier is bonded. The cashier receives cash from customers and operates a machine
that ejects serially numbered tickets. The roll of tickets are inserted and locked into the
machine by the theater manager at the beginning of each cashier’s shift.
After purchasing a ticket, the customer takes the ticket to the doorperson stationed at
the entrance of the theater lobby some 50 feet from the cashier’s booth. The door
person tears the ticket in half, admits the customers, and returns the ticket to the
customers. The other half of the ticket is dropped into a locked box by the door
attendant.

At the end of the cashier’s shift, the theater manager retrieves the ticket rolls from the
machine and makes a cash count. The cash count sheet is initialed by the cashier. At
the end of the day, the manager deposits the cash receipts at ABC Banking in a bank
night deposit vault located in the mall. In addition, the manager sends copies of the
deposit slips and initialed cash count sheets to the theater company’s treasurer for
verification and to the company’s accounting department. Receipts from the first shift
are stored in a safe located in the manager’s office.

Requirements:

Identify the internal control principles and their application to the cash receipts
transaction of Saratoga Theater.

Second Problem
Frank had 500 unnumbered tickets printed for the dance. He left the tickets in a box
on his desk and told the choir student to make many tickets as they thought they could
sell for 5.00 each. In order to ensure that no tickets would be floating around, he told
them to dispose of any unsold tickets. When the students received payment for the
tickets, they were to bring the cash back to Frank and would put it in a locked box in
his desk drawer,

The day of the dance, Frank wrote a check from the account to pay Jay DAVE. The DJ
said, however, that he accepted only cash and did not give reasons. So Frank took $200
out of the cash box and gave it to Jay. At the dance, Frank has Nora working at the
entrance of the gymnasium, collecting tickets from students and selling tickets to those
who had not pre-purchased them. Frank estimated that 400 students attended the
dance.

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The following day Franks closed out the bank account, which had 250 in it, and gave
that amount plus the $100 in the cash box to Principal Santos. Principal Santos seemed
surprise that, after generating $2,000 in sales, the dance netted only 430 in cash. Frank
did not know how to respond.

Requirements:

Identify the affected internal control principles, the corresponding internal control
weaknesses and the needed recommendations to address the cited weaknesses.