diff --git a/cycles-ledger/src/storage.rs b/cycles-ledger/src/storage.rs
index bf24e09..2089e19 100644
--- a/cycles-ledger/src/storage.rs
+++ b/cycles-ledger/src/storage.rs
@@ -243,9 +243,7 @@ pub fn transfer(
             .expect("failed to update 'from' balance");
 
         let to_balance = s.balances.get(&to_key).unwrap_or_default();
-        s.balances
-            .insert(to_key, to_balance + amount)
-            .expect("failed to update 'to' balance");
+        s.balances.insert(to_key, to_balance + amount);
 
         let phash = s.last_block_hash();
         let block_hash = s.emit_block(Block {
diff --git a/cycles-ledger/tests/client.rs b/cycles-ledger/tests/client.rs
index 1bc2ef3..c3fddb7 100644
--- a/cycles-ledger/tests/client.rs
+++ b/cycles-ledger/tests/client.rs
@@ -2,7 +2,10 @@ use candid::{Decode, Encode, Nat, Principal};
 use cycles_ledger::endpoints::{self, DepositResult, SendArg};
 use depositor::endpoints::DepositArg;
 use ic_test_state_machine_client::{StateMachine, WasmResult};
-use icrc_ledger_types::icrc1::account::Account;
+use icrc_ledger_types::icrc1::{
+    account::Account,
+    transfer::{TransferArg, TransferError},
+};
 use num_traits::ToPrimitive;
 
 pub fn deposit(
@@ -52,3 +55,32 @@ pub fn send(
         panic!("send rejected")
     }
 }
+
+pub fn transfer(
+    env: &StateMachine,
+    ledger_id: Principal,
+    from: Account,
+    args: TransferArg,
+) -> Result<Nat, TransferError> {
+    let arg = Encode!(&args).unwrap();
+    if let WasmResult::Reply(res) = env
+        .update_call(ledger_id, from.owner, "icrc1_transfer", arg)
+        .unwrap()
+    {
+        Decode!(&res, Result<candid::Nat, TransferError>).unwrap()
+    } else {
+        panic!("transfer rejected")
+    }
+}
+
+pub fn fee(env: &StateMachine, ledger_id: Principal) -> Nat {
+    let arg = Encode!(&()).unwrap();
+    if let WasmResult::Reply(res) = env
+        .query_call(ledger_id, Principal::anonymous(), "icrc1_fee", arg)
+        .unwrap()
+    {
+        Decode!(&res, Nat).unwrap()
+    } else {
+        panic!("fee call rejected")
+    }
+}
diff --git a/cycles-ledger/tests/tests.rs b/cycles-ledger/tests/tests.rs
index 24e91ba..176e609 100644
--- a/cycles-ledger/tests/tests.rs
+++ b/cycles-ledger/tests/tests.rs
@@ -1,7 +1,7 @@
 use std::path::PathBuf;
 
 use candid::{Encode, Nat, Principal};
-use client::deposit;
+use client::{deposit, transfer};
 use cycles_ledger::{
     config::{self, FEE},
     endpoints::{SendArg, SendErrorReason},
@@ -10,10 +10,13 @@ use depositor::endpoints::InitArg as DepositorInitArg;
 use escargot::CargoBuild;
 use ic_cdk::api::call::RejectionCode;
 use ic_test_state_machine_client::StateMachine;
-use icrc_ledger_types::icrc1::{account::Account, transfer::Memo};
+use icrc_ledger_types::icrc1::{
+    account::Account,
+    transfer::{Memo, TransferArg, TransferError},
+};
 use serde_bytes::ByteBuf;
 
-use crate::client::{balance_of, send};
+use crate::client::{balance_of, fee, send};
 
 mod client;
 
@@ -459,3 +462,85 @@ fn test_send_fails() {
     .unwrap_err();
     assert_eq!(0, balance_of(env, ledger_id, user_2));
 }
+
+#[test]
+fn test_transfer() {
+    let env = &new_state_machine();
+    let ledger_id = install_ledger(env);
+    let depositor_id = install_depositor(env, ledger_id);
+    let user1 = Account {
+        owner: Principal::from_slice(&[1]),
+        subaccount: None,
+    };
+    let user2: Account = Account {
+        owner: Principal::from_slice(&[2]),
+        subaccount: None,
+    };
+    let deposit_amount = 1_000_000_000;
+    deposit(env, depositor_id, user1, deposit_amount);
+    let fee = fee(env, ledger_id);
+
+    let transfer_amount = Nat::from(100_000);
+    transfer(
+        env,
+        ledger_id,
+        user1,
+        TransferArg {
+            from_subaccount: None,
+            to: user2,
+            fee: None,
+            created_at_time: None,
+            memo: None,
+            amount: transfer_amount.clone(),
+        },
+    )
+    .unwrap();
+
+    assert_eq!(balance_of(env, ledger_id, user2), transfer_amount.clone());
+    assert_eq!(
+        balance_of(env, ledger_id, user1),
+        Nat::from(deposit_amount) - fee.clone() - transfer_amount.clone()
+    );
+
+    // Should not be able to send back the full amount as the user2 cannot pay the fee
+    assert_eq!(
+        TransferError::InsufficientFunds {
+            balance: transfer_amount.clone()
+        },
+        transfer(
+            env,
+            ledger_id,
+            user2,
+            TransferArg {
+                from_subaccount: None,
+                to: user2,
+                fee: None,
+                created_at_time: None,
+                memo: None,
+                amount: transfer_amount.clone(),
+            },
+        )
+        .unwrap_err()
+    );
+
+    // Should not be able to set a fee that is incorrect
+    assert_eq!(
+        TransferError::BadFee {
+            expected_fee: fee.clone()
+        },
+        transfer(
+            env,
+            ledger_id,
+            user2,
+            TransferArg {
+                from_subaccount: None,
+                to: user1,
+                fee: Some(Nat::from(0)),
+                created_at_time: None,
+                memo: None,
+                amount: transfer_amount.clone(),
+            },
+        )
+        .unwrap_err()
+    );
+}