Asked by Terry Valentine on Jun 14, 2024
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Stanmore Corporation obtains from Southwell Manufacturing a line of credit of $50,000 to help set up a new distribution center. Stanmore initially uses $17,000 for purchase of inventory. Southwell only has a security interest in the inventory that covers that initial $17,000 advance.
Security Interest
A legal claim or lien on collateral, which gives the holder the right to seize property if the debtor fails to meet the obligations of a loan or agreement.
Line of Credit
An arrangement between a financial institution and a client that establishes a maximum loan balance that the borrower can access.
Inventory
The total amount of goods and materials held by a business for the purpose of sale or production.
- Acquire knowledge about the basics of a security interest and the necessities for its attachment and perfection in line with Article 9 of the UCC.
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Learning Objectives
- Acquire knowledge about the basics of a security interest and the necessities for its attachment and perfection in line with Article 9 of the UCC.
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