Drill Bit Company Issues a Check Drawn on East Bank

question 60

Multiple Choice

Drill Bit Company issues a check drawn on East Bank made payable to Faux Products for a shipment of Genuine-brand machine parts. Drill Bit discovers that the goods are counterfeit and orders East Bank not to pay the check. Meanwhile, Faux negotiates the check to Haul-Away Trucking, which takes it in good faith, for value, and unaware of Faux's fraud. Entitled to payment on the check is

• A)no one.
• B)ordinary holders, including Haul-Away, only.
• C)ordinary holders, HDCs, and holders through HDCs.
• D)HDCs, including Haul-Away, only.

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Definitions:

Warranty Expense

Costs associated with the commitment to repair or replace a product if it fails within a specified period.

Warranty Repairs

Services offered to repair or replace products free of charge that have been sold with a guarantee promising repair if necessary within a certain period.

Income Statement

A financial document summarizing a company's revenues, expenses, and profits over a specific period, typically a quarter or year.

Sales Units

The number of units of a product that have been sold during a specific period.