1. Franco Co.s recordkeeper left town after the manager discovered that a large sum of money had been stolen. The recordkeeper had written and signed several checks made payable to her fianc and then recorded the checks as salaries expense. The fianc, who cashed the checks but never worked for the company, left town with the recordkeeper. The company had an uninsured loss of $184,000. Evaluate Francos internal control system and indicate which principles of internal control were ignored.

2. Recommend an internal control procedure for each situation: (a) A concession company has one employee who sells towels, coolers, and sunglasses at the beach. Each day, the employee is given enough towels, coolers, and sunglasses to last through the day and enough cash to make change. The money is kept in a box at the stand. (b) An antique store has one employee who is given cash and sent to garage sales each weekend. The employee pays cash for any merchandise acquired that the antique store resells.