Francis Jeffers Purchased a Cashier's Check in the Amount of $5

question 70

Multiple Choice

Francis Jeffers purchased a cashier's check in the amount of $5, 000 from Northern Star Bank.The check was made payable to Kyle Naughton and was delivered to him.Twelve months later, the Northern Star Bank branch manager informed Jeffers that the cashier's check was still outstanding.Jeffers subsequently signed a form, requesting that payment be stopped and a replacement check be issued.Northern Star Bank issued a replacement check to Jeffers.Eight months later, Naughton deposited the original cashier's check in his bank, which was paid by Northern Star Bank.Northern Star Bank requested that Jeffers repay the bank $5, 000.When he refused, Northern Star Bank sued Jeffers to recover this amount and the court awarded Northern Star Bank damages amounting to $5, 500. Which of the following, had it happened, would have resulted in the court ruling in Jeffers' favor?

• A)Jeffers cashed the replacement check before Naughton had presented the original check at his bank.
• B)Jeffers paid Naughton the $5, 000 in cash after obtaining the replacement check from Northern Star Bank.
• C)Jeffers indemnified Northern Star Bank for potential damages arising from the issue of the replacement check.
• D)Jeffers renewed the stop-payment order on the original check at the end of six months.

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer balances from temporary accounts to permanent accounts.

Long-term Note Payable

A debt obligation that is due for repayment beyond one year's time, representing a form of long-term financing.

Prepaid Expense

Expenses paid in advance for goods or services to be received in the future, considered as an asset on the balance sheet until fully consumed or used.

Balance Sheet

A financial overview presenting a business's total assets, current liabilities, and the equity portion of its shareholders on a designated day.