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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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Question

Alexander is a resident of Utah, where gambling is illegal. Alexander visits Goldstrike Casino in Reno, Nevada, and loses all the money he brought with him. Frustrated with his losses and determined to win his money back, Alexander writes a check to Goldstrike drawn on his bank in Utah for $5,000 to obtain more cash so that he can keep gambling. Goldstrike also requires him to sign an agreement guaranteeing that he will repay any money advanced to him. Fortunately, Alexander’s luck turned; he walks away from Goldstrike with $35,000 in his pocket. As soon as he gets home, Alexander issues a stop payment order on the $5,000 check. If Goldstrike files suit against Alexander in Utah to collect its money:

a) Goldstrike will win because the full faith and credit clause of the U.S. Constitution requires each state to honor the laws of its sister states.

b) Goldstrike will lose because suits over gambling on credit cannot be enforced across state lines.

c) Goldstrike will lose because gambling is illegal in Utah.

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