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Carmine Comptroller is an employee of Dazzling Robot Company (DRC). Carmine has authority to sign checks on behalf of DRC a. Carmine needs to pay Acme Battery Company $1000. Carmine writes a check to "cash" and signs it but accidentally writes out "One Hundred Dollars" in words even though he puts the proper number "$1000" on the check. Carmine mails the check to Acme and later discovers that Acme breached the contract so he decides be will not pay them and puts a stop payment on the check. However, the check is stolen from Acme's offices by Theron Thief (and Acme was not negligent) Theron then gives it to his landlord, Larry Landlord, who Theron already owes $1000. Larry has no idea of the theft or any claims on the check. Larry then gives the check to Gary Graduate, his nephew, as a graduation gift. When the check bounces, Gary makes a claim against DRC for $1000. DRC responds that Gary cannot collect on the check since it was stolen and Acme breached the contract for which the payment was made Can Gary collect on the check. Why or why not? If so, how much can be collect? b. Carmine is angry at DRC since his annual bonus was too small. Carmen decides to get even by creating an employee, Steven Even. Carmen writes a check to Steven, and since he has authority to sign for DRC he signs it. Then Carmine indorses it with Steven's name. He deposits it into an account he has opened in Steven Even's name and the check clears DRC finds out and wants to hold the bank liable for paying the check since there was a forged indorsement. Must the bank pay DRC back, why or why not?

Carmine Comptroller is an employee of Dazzling Robot Company (DRC). Carmine has authority to sign checks on behalf of DRC a. Carmine needs to pay Acme Battery Company $1000. Carmine writes a check to "cash" and signs it but accidentally writes out "One Hundred Dollars" in words even though he puts the proper number "$1000" on the check. Carmine mails the check to Acme and later discovers that Acme breached the contract so he decides be will not pay them and puts a stop payment on the check. However, the check is stolen from Acme's offices by Theron Thief (and Acme was not negligent) Theron then gives it to his landlord, Larry Landlord, who Theron already owes $1000. Larry has no idea of the theft or any claims on the check. Larry then gives the check to Gary Graduate, his nephew, as a graduation gift. When the check bounces, Gary makes a claim against DRC for $1000. DRC responds that Gary cannot collect on the check since it was stolen and Acme breached the contract for which the payment was made Can Gary collect on the check. Why or why not? If so, how much can be collect? b. Carmine is angry at DRC since his annual bonus was too small. Carmen decides to get even by creating an employee, Steven Even. Carmen writes a check to Steven, and since he has authority to sign for DRC he signs it. Then Carmine indorses it with Steven's name. He deposits it into an account he has opened in Steven Even's name and the check clears DRC finds out and wants to hold the bank liable for paying the check since there was a forged indorsement. Must the bank pay DRC back, why or why not?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Carmine Comptroller is an employee of Dazzling Robot Company (DRC). Carmine has authority to sign checks on behalf of DRC. a. Carmine needs to pay Acme Battery Company $1000. Carmine writes a check to "cash" and signs it but accidentally writes out "One Hundred Dollars" in words even though he puts the proper number "$1000" on the check. Carmine mails the check to Acme and later discovers that Acme breached the contract so he decides be will not pay them and puts a stop payment on the check. However, the check is stolen from Acme's offices by Theron Thief (and Acme was not negligent). Theron then gives it to his landlord, Larry Landlord, who Theron already owes $1000. Larry has no idea of the theft or any claims on the check. Larry then gives the check to Gary Graduate, his nephew, as a graduation gift. When the check bounces, Gary makes a claim against DRC for $1000. DRC responds that Gary cannot collect on the check since it was stolen and Acme breached the contract for which the payment was made. Can Gary collect on the check. Why or why not? If so, how much can be collect? b. Carmine is angry at DRC since his annual bonus was too small. Carmen decides to get even by creating an employee, Steven Even. Carmen writes a check to Steven, and since he has authority to sign for DRC be signs it. Then Carmine indorses it with Steven's name. He deposits it into an account he has opened in Steven Even's name and the check clears. DRC finds out and wants to hold the bank liable for paying the check since there was a forged indorsement. Must the bank pay DRC back, why or why not?
Transcribed Image Text:Carmine Comptroller is an employee of Dazzling Robot Company (DRC). Carmine has authority to sign checks on behalf of DRC. a. Carmine needs to pay Acme Battery Company $1000. Carmine writes a check to "cash" and signs it but accidentally writes out "One Hundred Dollars" in words even though he puts the proper number "$1000" on the check. Carmine mails the check to Acme and later discovers that Acme breached the contract so he decides be will not pay them and puts a stop payment on the check. However, the check is stolen from Acme's offices by Theron Thief (and Acme was not negligent). Theron then gives it to his landlord, Larry Landlord, who Theron already owes $1000. Larry has no idea of the theft or any claims on the check. Larry then gives the check to Gary Graduate, his nephew, as a graduation gift. When the check bounces, Gary makes a claim against DRC for $1000. DRC responds that Gary cannot collect on the check since it was stolen and Acme breached the contract for which the payment was made. Can Gary collect on the check. Why or why not? If so, how much can be collect? b. Carmine is angry at DRC since his annual bonus was too small. Carmen decides to get even by creating an employee, Steven Even. Carmen writes a check to Steven, and since he has authority to sign for DRC be signs it. Then Carmine indorses it with Steven's name. He deposits it into an account he has opened in Steven Even's name and the check clears. DRC finds out and wants to hold the bank liable for paying the check since there was a forged indorsement. Must the bank pay DRC back, why or why not?
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