Petition in bankruptcy, Burton did not notify Wilson of

Petition in bankruptcy

Assignment Help Accounting Basics

Reference no: EM13149982

Wilson drew a sight draft on Jimmy Foxx (a customer who owed Wilson money on an open account), payable to the order of Burton, one of Wilson's creditors. Burton presented it to Foxx. After examining the draft as to its authenticity and after checking the amount against outstanding debts to Wilson, Foxx wrote on its face "Accepted--payable in 10 days" and signed it. When Burton returned at the end of 10 days, Foxx told him he could not pay and was hard-pressed for cash. Burton did not notify Wilson of these facts. Two days later when Burton again presented the instrument for payment, Burton was told that Foxx's creditors had filed a petition in bankruptcy that morning. Which of the following statements is true?

A. Foxx was secondarily liable on the draft at its inception.

B. Wilson had primary liability on the draft at its inception.

C. The instrument in question is a type of demand promissory note.

D. Foxx assumed primary liability at the time of acceptance.

Reference no: EM13149982

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