Question

During 2020 Carne Corporation transferred inventory to Nolan Corporation and agreed to repurchase the merchandise early in 2021. Nolan then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Carne. In 2021 when Carne repurchased the inventory, Nolan used the proceeds to repay its bank loan. This transaction is known as a(n) assignment for the benefit of creditors. product financing arrangement. installment sale. consignment.

Answer 1

Answer: product financing arrangement

Step-by-step explanation:

A product financing arrangement is referred to as a transaction whereby a company sells an inventory and then agrees to repurchase it.

The purpose of the product financing arrangement is to allow the seller to be able to arrange the financing of its original purchase of the inventory. Therefore, the above situation between Carne Corporation and Nolan Corporation depicts a product financing arrangement.