Rodeo Ranch's agent Slim is authorized to draw checks on Rodeo Ranch's account in Town Bank. Upper Range Corporation is a Rodeo Ranch supplier. Slim writes a check "pay to the order of Upper Range [signed] Slim," indorses the check in Upper Range's name, and deposits it in his account in Verity Bank. If Verity Bank collects payment, the ultimate party most likely to suffer the loss is
A) no one.
B) Rodeo Ranch.
C) Town Bank.
D) Upper Range.

Question

Quizplus · Accepted Answer

Slim drew a check on Rodeo Ranch's account and deposited it into his own account, which is known as check kiting. If Verity Bank collected payment, it would have been from Rodeo Ranch's account, and Rodeo Ranch would have suffered the loss. Therefore, the correct answer is B.

Rodeo Ranch's Agent Slim Is Authorized to Draw Checks on Rodeo