Tom draws a check, on his account in State Bank in New York, payable to Digital Media, Inc., in San Francisco. Digital deposits the check in its ac¬count at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank sends the check to State Bank.

-Refer to Fact Pattern 17-2.When Digital's bank received the check,it was required to pass it on
A)before midnight of the next banking day.
B)before midnight of the next day,even if it was not a "banking" day.
C)before noon of the next banking day.
D)within five business days.

Question

Tom draws a check, on his account in State Bank in New York, payable to Digital Media, Inc., in San Francisco. Digital deposits the check in its ac¬count at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank sends the check to State Bank.

-Refer to Fact Pattern 17-2.When Digital's bank received the check,it was required to pass it on

-Refer to Fact Pattern 17-2.When Digital's bank received the check,it was required to pass it on
A)before midnight of the next banking day.
B)before midnight of the next day,even if it was not a "banking" day.
C)before noon of the next banking day.
D)within five business days.

Quizplus · Accepted Answer

As per the provisions of the Uniform Commercial Code (UCC) Section 4-301, Digital's bank was required to pass the check on to the next bank before midnight of the next banking day. This is known as the "midnight deadline." Therefore, option A is the correct answer.

Tom Draws a Check, on His Account in State Bank