Question

Planter, Inc. sold $100,000 in plants and plant supplies to Ace Corporation. When the supplies were delivered to Ace, Ace ordered its bank, Fourth National, to pay $100,000 to Planter. Fourth National debited Ace's account and ordered Chase Superior, Planter's bank, to credit Planter's account for $100,000. In this transaction:

a. Planter is the originator and Ace is the beneficiary.
b. Ace is the originator and Chase Superior is the beneficiary.
c. Ace is the originator and Planter is the beneficiary.
d. Fourth National is the beneficiary and Chase Superior, the originator.

Answer 1

Ace Corporation is the originator, and Planter, Inc. is the beneficiary in the transaction that involves payment for plants and supplies. Neither Fourth National nor Chase Superior is the originator or beneficiary; they are intermediaries.

Step-by-step explanation:

In the transaction described, Ace Corporation is the originator, as they are the entity that initiated the payment order to Fourth National Bank to pay Planter, Inc. for the plants and supplies. Planter, Inc. is the beneficiary, as they are the receiver of the $100,000 payment for the transaction. The correct answer is therefore: c. Ace is the originator and Planter is the beneficiary. The banks involved, Fourth National and Chase Superior, act as intermediaries to facilitate the transaction; neither is the originator nor the beneficiary.

To relate this to the provided reference information: when Singleton Bank lends $9 million to Hank's Auto Supply, Singleton Bank records the loan as an asset, and Hank's Auto Supply receives a cashier's check, which they deposit into their account at First National. This increases First National's deposits and reserves, demonstrating how banks record and process financial transactions.