PROBLEM 14–7 Prepare a Statement of Cash Flows LO14–1, LO14–2 Comparative financial statements for Weaver Company follow:[Table in the picture] During this year, Weaver sold some equipment for $20 that had cost $40 and on which there was accumulated depreciation of $16. In addition, the company sold long-term investments for $10 that had cost $3 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $40 of its own stock. This year Weaver did not retire any bonds. Required: 1. Using the indirect method, determine the net cash provided by operating activities for this year. 2. Using the information in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for this year.PROBLEM 14–9 Understanding a Statement of Cash Flows LO14–1, LO14–2 Brock Company is a merchandiser that prepared the statement of cash flows and income statement provided below:Required: Assume you have been asked to teach a workshop to the employees within Brock Company’s Marketing Department. The purpose of your workshop is to explain how the statement of cash flows differs from the income statement. Your audience is expecting you to explain the logic underlying each number included in the statement of cash flows. Prepare a memo that explains the format of the statement of cash flows and the rationale for each number included in Brock’s statement of cash flows.Garrison, Ray; Garrison, Ray. Managerial Accounting (Page 716). McGraw-Hill Higher Education. Kindle Edition.

Part 1Article 2 and 2(A) of the UCC apply to ____________.depositsleases onlynegotiable instrumentssales and leasessales onlySuppose for your new job you need to arrange the lease of a company vehicle. In your dealings with the car lease company, they fax over an offer for your acceptance. However, you change one of the terms from the lease company's original offer in your acceptance. Instead of paying in advance, you change the contract to say "Payment is due at the time and place at which the buyer is to receive the goods." Does the changing of the terms of the offer still allow for a valid acceptance?No, because payment type can never be left unspecified in UCC contracts.No, because the contract is required to be in writing under the statute of frauds.No, because of the mirror-image rule.Yes, the mirror-image rule does not apply.Yes, because this scenario is an example of a firm offer.In what states has Article 2 of the UCC been adopted?In no states in the United States.In all states except Louisiana.States do not need to adopt the UCC to enact the rules.In all states in the United States.Article 2 of the UCC is mandated by the Constitution.Charlene is starting a birthday party catering business and leases a popcorn machine and a frozen drink maker from E-Z Rental. Then Mrs. Smith pays Charlene for Charlene's catering services at her son's birthday party. Who is the lessor?Both Charlene and Mrs. Smith.Charlene.E-Z Rental.Mrs. Smith.None of these parties are the lessor.Suppose your company is a merchant and you enter into a contract with another merchant. However, instead of a formalized contract between the two parties, the other company just sends a written memo outlining the products ordered and prices. Is this memo sufficient to satisfy the statute of frauds?Yes, if two parties are merchants, a written memo is deemed to satisfy the statute of frauds.No, this is a specifically manufactured good.No, memos never satisfy a statute of frauds requirement.No, memos are never binding.Yes, merchants do not need any written evidence to satisfy the statute of frauds.All of the following give rise to a voidable title exceptthe buyer is a minor.the seller was deceived as to the identity of the purchaser.the buyer wrote a bad check for the goods.the seller acquired the goods through a cash offering.the goods were procured through criminal fraud.Suppose Ned sells Flanders a flat screen TV. Flanders paid for the TV with a bad check, so the contract was voidable. Then Flanders gave you the flat screen as a gift for your graduation present. What kind of title do you have for the TV?Voidable, because you received the goods as a gift.Good, because you got the gift in good faith.Void, because the activity described is illegal.Void, because the contract involves check fraud.Good, because Flanders (the purchaser) made a good-faith purchase.If you buy a stolen watch from a vender on the streets of N.Y.C., and you know for a fact the vendor stole the watch from an unsuspecting woman on the street, what kind of title do you have for the watch?Valid title, but you might be liable for some sort of negligent tort.Good title, because you were a good-faith purchaser.You have no title because the goods were acquired through theft.A voidable title, because the woman on the street can find you to get the watch back.Good title, because you were not the one who stole the goods.Joey buys a couch from a furniture store for $450. He pays and the store delivers the couch to Joey's house the next day.Recall that the critical thinking framework for legal reasoning involves asking what missing information exists in a case. What information that is missing in this scenario would allow you to determine whether the title is voidable?Whether the contract was a simple delivery contract.Whether insurable interest was involved.The ownership of the title and couch.The right to encumbrance of the couch.Whether Joey wrote a bad check for the couch.An insurable occurs when a contractual party has a/anMultiple Choiceeconomic interest.title.risk of loss.economic interest and title.title and risk of loss.economic interest and risk of loss.economic interest, title, and risk of loss.Required informationTitleIntroductionRead the overview below and complete the activities that follow.Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles.CONCEPT REVIEW:Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price.Mini-Case:Read the scenario below and answer the following questions relating to the sale of a title.Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday.What is the sale of a title?Multiple ChoiceThe passing of title from the seller to the buyer for a price.When insurance on goods can be purchased.When the goods become part of the buyer's inventory and can serve as collateral for a loan.When the original parties would be void but the goods have already been sold to a third party.When a buyer can sell goods to a third party.Required informationTitleIntroductionRead the overview below and complete the activities that follow.Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles.CONCEPT REVIEW:Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price.Mini-Case:Read the scenario below and answer the following questions relating to the sale of a title.Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday.Suppose that the reason the jewelry was brand new and at such a bargain price online was because the seller actually stole the jewelry. If the jewelry were stolen, what type of title would Hugo hold when he purchased the jewelry?Multiple ChoiceEntrustment.Both void and voidable.Voidable.Void.Good.Required informationTitleIntroductionRead the overview below and complete the activities that follow.Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles.CONCEPT REVIEW:Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price.Mini-Case:Read the scenario below and answer the following questions relating to the sale of a title.Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday.Once again, let's assume the jewelry was stolen. But suppose that Hugo did not know the jewelry was stolen. He bought the stolen jewelry, and then gave the gift to his mom in good faith. What kind of title does his mom now possess?Multiple ChoiceA good title because stolen goods are not considered stolen goods if the person did not know they were stolen.A good title because he bought the jewelry in good faith.A void title because stolen goods always remain stolen goods.A voidable title because this is a situation involving entrustment.A voidable title because the intentions of Hugo were dishonorable.Required informationTitleIntroductionRead the overview below and complete the activities that follow.Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles.CONCEPT REVIEW:Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price.Mini-Case:Read the scenario below and answer the following questions relating to the sale of a title.Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday.Now suppose that the goods were not stolen. The seller purchased the jewelry on clearance at wholesale price, and that is why he can offer such a good deal. Suppose, however, that Hugo bought the diamond jewelry with a check. Come to find out, it was a bad check and the check bounced. In this scenario, what kind of title does Hugo possess?Multiple ChoiceVoid.Entrustment.Voidable, because the buyer wrote a bad check.Good.Voidable, because Hugo is just a minor.Required informationTitleIntroductionRead the overview below and complete the activities that follow.Before beginning this interactive, you should review LO 15-6 in your text. Pay particularly close attention to the differences among the three types of titles that can arise when a buyer purchases goods: good titles, void titles, and voidable titles.CONCEPT REVIEW:Neither businesses nor individuals can own or sell goods unless you have good title to them. The Uniform Commercial Code (UCC) defines a sale as the passing of title from the seller to the buyer for a price.Mini-Case:Read the scenario below and answer the following questions relating to the sale of a title.Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday.If Hugo's title is voidable, what can the seller do?Multiple ChoiceMake Hugo pay him full price for the diamonds.Turn Hugo into the police for creating a void contract.Nothing, he should have stated that he only accepts cash.Cancel the contract, but not reclaim the jewelry.Cancel the contract and reclaim the jewelry.Pat 2_______________ is the legal term for honesty in fact.Course of dealingPerfect tender ruleCommercial reasonablenessGood faithTender of deliveryThe buyer or lessee typically inspects the goods _____________, unless the parties have agreed otherwise.before payingafter payingfor as long as they want after receiving the goodsonly if the goods appear to be conformingup to a year after receiving the goodsA seller has the right to effect a cure of non-conforming goods, except whenMultiple Choicetime is not of the essence.the non-conforming goods were not accepted by the buyer.the buyer notified the seller of the non-acceptance.the goods were seasonal and the season has passed.the goods were damaged by a common carrier.Specific performance is allowed as a remedy for a breach of contract in which of the following situations?The seller has breached contracts with this buyer more than once.The goods have been accidentally destroyed by no fault of the seller.The goods are valued at more than $7,500.The goods are unique.A remedy of law is adequate.When is it permissible for a buyer to reject acceptance of nonconforming goods?When a natural disaster ruins the nonconforming goods once they are in the possession of the buyer.When the buyer for no reason decides he does not want the goods anymore.When the seller engages in fraud.When a reasonable assumption is made that the nonconformity would be cured but it is not.When the buyer intends to sue the seller for punitive damages resulting from the nonconforming goods.Canceling the contract is _____________ from the Uniform Commercial Code's (UCC) perspective.the remedy of last resortalways used as a legal remedythe easiest remedy to usenever used as a legal remedythe most often used remedyA contract calls for liquidated damages of $1,000 per day on late delivery of goods. The total value of the contract is $3200 and the goods are five days late. The buyer demands $5,000 in liquidated damages. The likely result isMultiple Choicethe buyer will receive the $5000.the liquidated damage clause is punitive and not enforceable here.the liquidated damage clause is not punitive but the court will not enforce it as it is exculpatory.the buyer will not receive the $5000 but will receive something less solely under the liquidated damage clause.the buyer will receive the $5000 in liquidated damage clause plus the buyer's actual damages as well.The law that is designed to protect consumers in warranties by requiring sellers who issue written warranties to indicate whether it is a full or limited warranty is known as the _________________________.Effective Disclaimer ActMagnuson-Moss ActWarranty Disclaimer ActLandham ActSmoot-Hawley ActA camera purchased at a camera shop is covered by a(n) ___________________, but a camera bought from a private seller on Craigslist is not, unless the Craigslist seller is a camera merchant.implied warranty of trade usagefull warrantyimplied warranty of merchantabilityimplied warranty of fitness for a particular purposeexpress warrantyA buyer unknowingly purchases stolen goods from the buyer. This transaction is a breach ofMultiple Choiceexpress warranty.implied warranty of title.implied warranty of merchantability.implied warranty of particular purpose.implied warranty of usage.Required informationThird Party Warranties and Warranty DisclaimersIntroductionRead the overview below and complete the activities that follow.Before beginning this interactive, review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties, and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit.CONCEPT REVIEW:The idea of a seller's being in breach of an implied warranty raises an entirely new issue: Is the seller liable to anyone other than the buyer? This question may initially sound peculiar. After all, the seller and the buyer are bound together by contract, and if either breaches, then the breaching party is liable to the nonbreaching party. But in many scenarios, often it is not the buyer, but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to warranties.Mini-Case:Read the case and answer the questions that follow.Suppose, Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet, and he has a full and written warranty on the product. Howie's 18-year-old daughter, Joanna, was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole in the sink, hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye.Does a "contractual relationship" exist between Joanna (the third party) and the kitchen appliance seller?Multiple ChoiceYes, Joanna and the seller entered into an official contract.No, Joanna cannot bring a breach of warranty suit against the seller.Yes, the Uniform Commercial Code (UCC) recognizes that third parties automatically enter into contracts with sellers.No, Joanna did not enter into a contract with the merchant.Yes, but only if Joanna paid for a portion of the garbage disposal.Required informationThird Party Warranties and Warranty DisclaimersIntroductionRead the overview below and complete the activities that follow.Before beginning this interactive, review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties, and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit.CONCEPT REVIEW:The idea of a seller's being in breach of an implied warranty raises an entirely new issue: Is the seller liable to anyone other than the buyer? This question may initially sound peculiar. After all, the seller and the buyer are bound together by contract, and if either breaches, then the breaching party is liable to the nonbreaching party. But in many scenarios, often it is not the buyer, but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to warranties.Mini-Case:Read the case and answer the questions that follow.Suppose, Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet, and he has a full and written warranty on the product. Howie's 18-year-old daughter, Joanna, was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole in the sink, hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye.Which of the following is not a choice the states are given regarding third-party beneficiaries of warranties, such as Joanna?Multiple ChoiceSeller's warranties extend to any reasonable and foreseeable user.Seller's warranties extend to only the person who purchased the good and has the receipt.Seller's warranties extend to the buyer's household members and guests.None of these.Seller's warranties extend to anyone injured by the good.Required informationThird Party Warranties and Warranty DisclaimersIntroductionRead the overview below and complete the activities that follow.Before beginning this interactive, review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties, and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit.CONCEPT REVIEW:The idea of a seller's being in breach of an implied warranty raises an entirely new issue: Is the seller liable to anyone other than the buyer? This question may initially sound peculiar. After all, the seller and the buyer are bound together by contract, and if either breaches, then the breaching party is liable to the nonbreaching party. But in many scenarios, often it is not the buyer, but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to warranties.Mini-Case:Read the case and answer the questions that follow.Suppose, Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet, and he has a full and written warranty on the product. Howie's 18-year-old daughter, Joanna, was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole in the sink, hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye.Most states have adopted which option regarding people like Joanna, who are third-party beneficiaries of warranties?Multiple ChoiceSeller's warranties extend to the buyer's household members and guests.Most states do not acknowledge any third-party beneficiaries of warranties.Seller's warranties extend to anyone injured by the good.Seller's warranties extend to only the person who purchased the good and has the receipt.Seller's warranties extend to any reasonable and foreseeable user.Required informationThird Party Warranties and Warranty DisclaimersIntroductionRead the overview below and complete the activities that follow.Before beginning this interactive, review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties, and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit.CONCEPT REVIEW:The idea of a seller's being in breach of an implied warranty raises an entirely new issue: Is the seller liable to anyone other than the buyer? This question may initially sound peculiar. After all, the seller and the buyer are bound together by contract, and if either breaches, then the breaching party is liable to the nonbreaching party. But in many scenarios, often it is not the buyer, but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to warranties.Mini-Case:Read the case and answer the questions that follow.Suppose, Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet, and he has a full and written warranty on the product. Howie's 18-year-old daughter, Joanna, was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole in the sink, hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye.Let's suppose that Howie and Joanna live in a state that has adopted the most common guideline regarding third-party beneficiaries to warranties. Who might be covered by the warranty for the garbage disposal?Multiple ChoiceOnly people who were stipulated as “foreseeable“ users on the written contractNo one other than the purchaser (Howie)Only Howie's immediate family, including JoannaAny foreseeable user, including Howie and JoannaOnly those injured by the good, including JoannaRequired informationThird Party Warranties and Warranty DisclaimersIntroductionRead the overview below and complete the activities that follow.Before beginning this interactive, review LO 16-6 and 16-7. Pay attention to the special situations in which third parties are beneficiaries to warranties, and when warranties can be disclaimed. This interactive will help explain who third-party beneficiaries of warranties are and how they benefit.CONCEPT REVIEW:The idea of a seller's being in breach of an implied warranty raises an entirely new issue: Is the seller liable to anyone other than the buyer? This question may initially sound peculiar. After all, the seller and the buyer are bound together by contract, and if either breaches, then the breaching party is liable to the nonbreaching party. But in many scenarios, often it is not the buyer, but rather a third party that uses the product or is injured by the product. So questions arise as to when those third parties are beneficiaries to warranties.Mini-Case:Read the case and answer the questions that follow.Suppose, Howie buys a garbage disposal from a kitchen appliance outlet. He has it professionally installed by professionals from the kitchen appliance outlet, and he has a full and written warranty on the product. Howie's 18-year-old daughter, Joanna, was cleaning up after dinner one evening when the garbage disposal began to malfunction. Parts flew out of the hole in the sink, hitting Joanna in the face and causing serious injuries. She had reconstructive surgery on her face and no longer has full vision in her right eye.Suppose Joanna is injured by the garbage disposal in 2004, but her family does not choose to bring a lawsuit against the kitchen appliance company until 2010. Can they bring a lawsuit for breach of contract in 2010?Multiple ChoiceNo, Howie waived his warranty when he failed to inspect the good.Yes, they can bring a lawsuit whenever they choose.No, Joanna is not a foreseeable user of the product.No, under the Uniform Commercial Code (UCC), they must sue within four years of the breach.Yes, the lawsuit would be within the statute of limitations.Part 3By writing the phrase "to the order of" or similar words near the specific payee's name, the document is a(n) _____________________.order instrumentchecktime instrumentinstrument of relative permanencedemand instrumentNegotiable instruments payable to whomever is bearing them are ________ and are treated like cash.not transferabledemand instrumentstime instrumentsconditional promises to paybearer instrumentsPayment on a time instrument can be made __________________.never, because time instruments do not require paymentonly at a specific future time, which must be easily determined from the document itselfat any future timeat any time in the present or futureon demand alwaysIf Billy wrote Jamie an IOU that said, "IOU $500 (signed) Billy Smith" on a piece of paper, it would __________________.be an example of a negotiable instrument if the consideration paid for the $500 was stated on the notebe an example of a negotiable instrument that could be passed to holder-in-due-coursebe an example of a cashier's checknot be a negotiable instrumentbe an example of a negotiable instrumentNegotiable instruments are governed by which of the UCC's articles?Article 5.Article 4.Article 3.The UCC does not apply to negotiable instruments.Article 2.The medium of exchange for negotiable instruments is _____________.a national currencyany combination of money, goods, and servicespromised servicescreditonly in U.S. dollarsWhich of the following is not an acceptable signature for negotiable instruments?Stamping."An X."A handwritten signature.All of these are acceptable signatures.A symbol used to designate the signee.Each of the following is an example of a negotiable instrument exceptMultiple Choicetraveler’s checks.certificates of deposit.promissory notes in exchange for goods or services.fiat money.cashier’s checks.An endorsement consisting of the endorser’s signature along with a named endorsee is called a/an:Multiple Choiceblank endorsement.special endorsement.trust endorsement.endorsement for deposit and collection only.endorsement to prohibit future endorsements.A traveler's check must have all but which of the following characteristics?The check is designated with the phrase traveler's check.The check is drawn on or through a bank.The check is a time instrument.The check requires a countersignature by a person whose signature appears on the instrument.The check is payable on demand.Which type(s) of checks will fully be funded if lost, stolen, or destroyed?Cashier's checks only.Cashier's, certified, and teller's checks.Cashier's and certified checks only.Cashier's and teller's checks only.None of these.When a bank certifies a check, what is the drawer's liability on the instrument?Primary; the bank accepts secondary liability.Secondary; the bank acquires primary liability.Unaffected; the procedure is only a formality.None; the bank assumes all liability.None of these.For a check to be considered "properly payable" by a bank, it must have each of the following characteristics except:Multiple ChoiceBe paid to someone entitled to enforce the check.Not be subject to a stop-payment.Have the drawee's authorized signature on the check.Be paid on or after the date of the check.Not have been altered.James provides Jack with a check for $2,000. Jack cashes this check from a Huntington bank. In this situation, Jack's bank is called a: Multiple Choicedepository bank.collecting bank.intermediary bank.payer bank.federal reserve bank.Which one of the following is a check for which the drawer and the drawee are the same bank?Multiple ChoiceTeller's checkCashier's checkTraveler's checkCertified checkMoney order Part 4Suppose Krissy orders some living room furniture from Bob. Krissy gives Bob a promissory note for the price of the furniture. But when Krissy receives the furniture, it is not the furniture she was promised. She refuses to pay on the note due to Bob's breach of contract. Both parties agree the contract was breached. However, Bob had already negotiated the note to a third party, Ron, who is an HDC. Will Krissy be allowed to use a "breach of contract" defense for not paying Ron the money on the note?Yes, an HDC is subject to the breach of contract defense.Yes, because Bob engaged in fraud.No, Bob did not breach his contract.No, an HDC is free from the breach of contract defense.Yes, an HDC has special rights and privileges against all defenses.Your grandparents give you a promissory note as a gift for a graduation present. Are you a holder in due course of this promissory note?Yes. The note was given as a gift.Yes. The note was negotiated in good faith.No. The note was given as a gift.Yes. The instrument was taken for value.Yes. The gift was taken without notice.Suppose Fred has a payroll check from his place of employment, Kelsey's Pub. He then endorses the back of a check and gives it to Clara as a form of payment. The holder (Clara) presented Fred's check, and the bank dishonored the check because of insufficient funds in Kelsey's Pub's account. Who is now liable for the check?Fred is secondarily liable.Kelsey's Pub is secondarily liable.Clara is liable.No one is liable because the money was not in the account.Kelsey's Pub and Fred are secondarily liable parties.You want a loan to start a business straight out of college. The bank, however, is a little wary about whether you will be able to pay the note, and therefore denies the loan. The bank decides to ask you to have a third party sign the note to ensure that the bank will be paid. Consequently, you get an accommodation party to sign the note as an endorser. Does the accommodation party have liability for the note?It depends whether the accommodation party commits fraud.Liability cannot be determined from the facts given.Yes, the accommodation party is secondarily liable.Yes, the accommodation party is primarily liable.No, the accommodation party is not liable.If a material alteration of an instrument exists but is not fraudulent, ______________________.the party whose rights have been affected by the change is completely discharged from the instrumentthe instrument will not be enforced, and the maker can sue the alterer or commit a tort against himthe instrument will not be enforced under the original termsthe instrument will be enforced with the material alteration intactthe instrument will be enforced under the original termsAfter a tennis match, William Blake autographs a piece of paper provided to him by a fan. However, the piece of paper was a negotiable instrument. What defense could Blake use to not be held liable for the instrument?Multiple ChoiceForgery.Duress.Fraud in the factum.Discharge through insolvency proceedings.Material alteration__________ occurs when a party agrees, in writing, not to sue the obliged party.A real defenseReacquisitionImpairment of recourseRenunciationDishonorOne of the female contestants on the reality show The Date is out clubbing in Vegas when a young man approaches her. He tells her that he is a big fan, and asks for her autograph. The contestant, believing she actually is noteworthy enough to be famous and be asked for autographs, obliges. In fact, she was duped and signed a promissory note instead of an actual autograph.Which of the following occurred in the scenario above?Forgery.Discharge by impairment.Fraud in the factum.Renunciation.A material alteration.Required informationHolder in Due CourseIntroductionRead the overview below and complete the activities that follow.A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.CONCEPT REVIEW:A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.Mini-Case:Read the case and then determine whether Zach is a holder in due course.Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.A holder in due course must first be a __________, or a party in possession of an instrument payable to the party or the bearer.Multiple ChoicecreditorholdernegotiatorNext Required informationHolder in Due CourseIntroductionRead the overview below and complete the activities that follow.A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.CONCEPT REVIEW:A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.Mini-Case:Read the case and then determine whether Zach is a holder in due course.Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.To be a holder in due course, the negotiable instrument must be _______________.Multiple Choiceexpired or dishonoredcomplete and authenticincomplete and forgedRequired informationHolder in Due CourseIntroductionRead the overview below and complete the activities that follow.A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.CONCEPT REVIEW:A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.Mini-Case:Read the case and then determine whether Zach is a holder in due course.Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.The holder in due course must take the negotiable instrument "for value." What does "for value" mean in the context of HDCs?Multiple ChoiceTaking the instrument in exchange for a promise that is yet to be performed.Taking the instrument in exchange for a promise that has already been performed.Taking something with consideration.Required informationHolder in Due CourseIntroductionRead the overview below and complete the activities that follow.A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.CONCEPT REVIEW:A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.Mini-Case:Read the case and then determine whether Zach is a holder in due course.Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.The HDC must take the negotiable instrument in good faith. What does "good faith" mean under the UCC?Multiple ChoiceWhat a reasonable holder would have done.Actual behavior.Honesty in fact and the observance of reasonable commercial standards of fair dealing.Required informationHolder in Due CourseIntroductionRead the overview below and complete the activities that follow.A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.CONCEPT REVIEW:A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.Mini-Case:Read the case and then determine whether Zach is a holder in due course.Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.HDCs must take an instrument without notice of various defects in the negotiable instrument. Which of the following is one potential defect of a negotiable instrument?Multiple ChoiceThe instrument has been endorsed.The instrument is overdue.The instrument has an authorized signature.Required informationHolder in Due CourseIntroductionRead the overview below and complete the activities that follow.A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.CONCEPT REVIEW:A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.Mini-Case:Read the case and then determine whether Zach is a holder in due course.Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.Generally, when is a check overdue?Multiple Choice30 days after its due date.90 days after its due date.150 days after its due date.Required informationHolder in Due CourseIntroductionRead the overview below and complete the activities that follow.A party who possesses a negotiable instrument payable to the party or bearer of the instrument is a holder of the instrument. A certain type of holder, however, called a holder in due course (HDC), has more extensive legal rights. This activity highlights the specific details that are necessary for someone to be considered an HDC.CONCEPT REVIEW:A negotiable instrument, as we saw in the preceding chapter, is a substitute for cash that is a written document containing the signature of the creator that makes an unconditional promise or order to pay a certain sum of money, either at a specified time or on demand. Negotiable instruments are executed on a daily basis in the form of checks, certificates of deposit, drafts, and promissory notes in exchange for goods, services, or business financing. One important characteristic of negotiable instruments is the ease of transferring them to a third party through negotiation. A negotiation occurs when multiple parties enter into an agreement meant to resolve a conflict or another subject of interest.Mini-Case:Read the case and then determine whether Zach is a holder in due course.Suppose Jason works as a part-time DJ. On December 31, 2010, he DJs a New Year's office party for KL Industries (a fictional company). They pay Jason his usual rate for the evening, $200. There is no reason to believe the check is not authentic.Jason does not cash the check immediately. Instead, he folds it up in his wallet and forgets about it. On April 15, 2011, Jason purchases some new DJ equipment from his friend, Zach. After purchasing all the equipment he planned on buying, he spies some lighting equipment he thinks would really help his business. However, he does not have enough cash, and his debit card does not have enough money transferred onto it. Jason asks Zach if he can endorse the back of the check to cover the cost instead. Zach agrees; Jason signs the back of the check and gives it to Zach as payment for the equipment.If a holder receives an overdue check, can he or she be a holder in due course of the check?Multiple ChoiceYes, as long as the holder does not have notice.No, a holder cannot be an HDC who is aware that an instrument is overdue.Yes, being overdue does not qualify as a defect for checks.