AC502 Unit 6 Article 9 Priority Problem Example

Course	AC502 Business Law for Accountants
Unit	Unit 6
Paper type	Secured transactions problem
Length	About 640 words, 5 pages double-spaced
Format	APA 7 student paper
School	Purdue University Global
Program	MS in Accounting
Updated	October 2026

Free sample paper for AC502 Unit 6

Five Creditors, One Roasting Machine: A Unit 6 Secured Transactions Problem Ranked Collateral by Collateral

[Student Name]

Purdue University Global

AC502: Business Law for Accountants

Unit 6 Secured Transactions Problem

[Instructor Name]

[Date]

The coffee roaster, its creditors and every date and figure are composite; the code sections and textbook cited are real; this is coursework analysis, not legal advice.

What this part is doingStating the conflict and the three-step order in the lead shows how the ranking is built.

Facts

1. March 2024: a bank lends $900,000 under a signed security agreement covering all equipment, inventory and accounts, now owned or later acquired, and files a financing statement the same month.

2. June 2, 2025: an equipment dealer sells the roaster a 60-kilo roasting machine for $310,000 on credit, retaining a security interest under a signed agreement, and delivers it. The dealer files on June 18.

3. July 1, 2025: a green coffee importer takes a signed security interest in the beans it ships on credit and files that day. It does not notify the bank.

4. A finance company financed the delivery van, and its lien is noted on the van's certificate of title.

5. September 2025: a supplier with an unpaid judgment has the sheriff levy on the roasting machine.

6. October 2025: the roaster defaults on every loan.

Attachment

Attachment needs three things: the creditor gave value, the roaster owned or had rights in the property, and the roaster signed an agreement describing that property (U.C.C. § 9-203). Every secured creditor here meets all three. The bank's after-acquired property clause lets its interest attach to the roasting machine and the green coffee the moment the roaster acquired them. The judgment creditor has no security agreement; it is a lien creditor by levy.

Perfection

The bank, the dealer and the importer perfected by filing. The van is covered by a certificate-of-title statute, so a financing statement is not effective for it; the finance company perfected by having its lien noted on the title (U.C.C. § 9-311). The bank's filing does not perfect an interest in the van.

Priority, Collateral by Collateral

Roasting machine. The basic rule ranks conflicting perfected interests by the earlier of filing or perfection, which would favor the bank (U.C.C. § 9-322). Article 9 makes an exception for the seller who financed the machine itself: its purchase-money claim on equipment outranks the earlier filer, provided it is perfected no later than twenty days after the buyer takes delivery (U.C.C. § 9-324). The dealer delivered on June 2 and filed on June 18, sixteen days later. The dealer ranks first, the bank second. The judgment creditor's September levy comes after both perfected interests and takes nothing ahead of them (U.C.C. § 9-317).

The purchase-money rule lets a seller who financed a specific machine jump a lender that filed fifteen months earlier, because without that machine on credit the bank's collateral would not include it at all.

What this part is doingThe highlighted sentence explains the policy behind the exception that decides the hardest row.

Green coffee inventory. The importer also holds a purchase-money interest, but the inventory rule is stricter: the purchase-money creditor must send an authenticated notice to any earlier-filed secured party before the debtor receives the goods. The importer never notified the bank, so the exception fails, and first-to-file governs. The bank ranks first, the importer second.

Accounts receivable. Only the bank claims them. The bank ranks first.

Delivery van. The finance company is the only creditor perfected in the van. It ranks first; the bank is unperfected in the van and ranks behind it.

Priority Table

1. Roasting machine: dealer first, bank second, judgment creditor third.

2. Green coffee: bank first, importer second.

3. Accounts receivable: bank only.

4. Delivery van: finance company first, bank unperfected.

Accounting Note

Each creditor's recovery depends on its rank and the collateral's value. The importer's failure to notify the bank turned a likely full recovery into a second position on perishable inventory (Clarkson et al., 2021).

What this part is doingEnding on the importer's missed step shows how one procedural error changed a creditor's position.

References

Clarkson, K. W., Miller, R. L., & Cross, F. B. (2021). Business law: Text and cases (15th ed.). Cengage.

U.C.C. § 9-203 (Am. L. Inst. & Unif. L. Comm'n 2010).

U.C.C. § 9-311 (Am. L. Inst. & Unif. L. Comm'n 2010).

U.C.C. § 9-317 (Am. L. Inst. & Unif. L. Comm'n 2010).

U.C.C. § 9-322 (Am. L. Inst. & Unif. L. Comm'n 2010).

U.C.C. § 9-324 (Am. L. Inst. & Unif. L. Comm'n 2010).

Reading the AC 502 Unit 6 instructions

Unit 6 of AC502 asks you to rank competing claims to a debtor's property. Begin with a dated fact list. For each creditor, test attachment first, noting any after-acquired property clause, then perfection, identifying the correct method for each type of collateral, including certificate-of-title goods. Then decide priority collateral by collateral, starting from the first-to-file-or-perfect rule and applying any exception, such as purchase-money priority for equipment or inventory, with its specific conditions. Place lien creditors correctly against perfected interests. Present the final ranking in a table with one row per item of collateral. Explain what any creditor's procedural error cost it. Reference each Article 9 provision you rely on, plus the assigned text, in APA 7. Keep dates exact throughout, because several rules turn on how many days passed.

How this AC502 Unit 6 example is built

The sample's fact list dates six events from the bank's 2024 filing to the October default. Attachment confirms each security agreement and the bank's after-acquired clause, and identifies the judgment creditor as a lien creditor. Perfection notes that the van required a title notation. The priority section takes the roaster first: the dealer's filing sixteen days after delivery meets section 9-324, and the highlighted sentence explains the policy. Green coffee goes to the bank because the importer skipped the required notice. Receivables go to the bank alone, the van to the finance company. A table summarizes the ranking, and a closing note shows the importer's missed step.

Reading the AC502 Unit 6 grading rubric

Secured transactions problems in AC502 earn points for applying attachment, perfection and priority in order and for accuracy on exceptions. Graders check that perfection methods match the collateral, especially for titled goods. The rubric gives significant weight to purchase-money analysis: the twenty-day window for equipment and the notice requirement for inventory must be applied precisely. Lien creditors must be ranked correctly. A priority table that matches the analysis earns credit for clarity. Answers that apply first-to-file throughout, or that treat a filing as perfecting an interest in a titled vehicle, rarely pass. Every rule should be tied to its Article 9 section in an APA 7 reference. Precise dates matter, since the twenty-day window and the timing of notice turn on them, so graders also check that the dates in the table match the fact list.

Common AC502 Unit 6 mistakes, and how to avoid them

Common Unit 6 errors start with ranking claims overall instead of collateral by collateral. Students apply first-to-file to every asset and miss purchase-money priority. The equipment and inventory purchase-money rules are confused, so the importer wins without notice. Filing is treated as perfecting an interest in a vehicle. The judgment creditor is placed ahead of perfected interests because it acted most recently. After-acquired property clauses are overlooked. If your section's problem involves different collateral, such as deposit accounts or consumer goods, our writers can work through the rules that govern it. Another slip is forgetting that a perfected creditor's rank in one asset says nothing about another, so a bank first in receivables can be second in equipment. Treat each row of the table as its own contest and the analysis stays clean.

Get an AC502 Unit 6 example written to your instructions

Set out the Unit 6 facts with every filing date, delivery date and collateral description the scenario gives, and add the rubric. A priority table comes back within 24-48h with the attachment, perfection and priority analysis behind each row. A first custom sample is free of charge, and the roaster and its creditors are invented for the exercise. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.

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AC502 Unit 6 questions, answered

Why does the dealer beat a bank that filed more than a year earlier?

Because purchase-money priority is the code's deliberate exception to first-to-file. A seller financing the very equipment it delivers takes priority over earlier blanket liens if it perfects within twenty days after the debtor receives the goods, and the dealer filed on day sixteen. The example states the general rule first, then shows exactly which facts satisfy the exception.

Would a notice to the bank have saved the importer?

Probably, if the notice reached the bank before the coffee arrived and the importer had also perfected by then. Inventory purchase-money priority requires both steps, so a lender already financing inventory can stop advancing against goods it will not control. The example marks the missing notice as the single fact that sent the importer behind the bank on every shipment.

Where would an accountant meet these rules?

In lien searches during an audit or a loan review, and in disclosing pledged assets. Knowing which filing covers which asset tells a reader of the statements what unsecured creditors can actually reach. The example closes with a sentence on that use, which keeps the problem inside a course designed for accountants rather than for lenders' counsel.

Where can I find a free AC502 Unit 6 sample paper?

This page holds a full AC502 Unit 6 secured transactions problem ranking five creditors of a composite coffee roaster across equipment, inventory, receivables and a van, with attachment, perfection, priority, a table and APA 7 references.

Why does the bank beat the importer on the green coffee?

Purchase-money priority for inventory requires notice to earlier-filed secured parties before the debtor receives the goods. The importer never notified the bank, so the exception fails and the bank's earlier filing wins.