Use the following information for questions
During 2010 Ebert Corporation transferred inventory to Holger Corporation and agreed to repurchase the merchandise early in 2011.Holger then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Ebert.In 2011 when Ebert repurchased the inventory, Holger used the proceeds to repay its bank loan.
-This transaction is known as a(n)
A)consignment.
B)instalment sale.
C)assignment for the benefit of creditors.
D)product financing arrangement.

Question

Use the following information for questions 
During 2010 Ebert Corporation transferred inventory to Holger Corporation and agreed to repurchase the merchandise early in 2011.Holger then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Ebert.In 2011 when Ebert repurchased the inventory, Holger used the proceeds to repay its bank loan.
-This transaction is known as a(n)
A)consignment.
B)instalment sale.
C)assignment for the benefit of creditors.
D)product financing arrangement.

Quizplus · Accepted Answer

This transaction is known as a product financing arrangement because Holger used the inventory as collateral to borrow from Norwalk Bank and then used the proceeds to repay the bank loan when Ebert repurchased the inventory.

Use the Following Information for Questions