Dug obtained a $450,000 loan from A-Bank to start a jewelry business, and signed a security agreement granting A-Bank a security interest in "all of Debtor's jewelry." A-Bank properly filed a financing statement as to all of Dug's "jewelry." Over the next 11 months Dug sold $75,000 worth of jewelry; he took the cash from these sales and used it to purchase antique furniture for his waiting area from "Thrifty's Used Furniture."
A-Bank has asked for advice as to how they should proceed with respect to the antique furniture in the waiting area. Which statement is correct?
1. A-Bank does not have a security interest in the antique furniture because it is not covered by the security agreement
2. A-Bank can only perfect its security interest in the antique furniture by filing a financing statement that covers the antique furniture or by taking possession of the antique furniture so long as either action is completed within the allotted grace period.
3. A-Bank has a continuously perfected security interest in the antique furniture under the "same filing office" rule.
4. A-Bank has a continuously perfected security interest in the antique furniture under the "cash proceeds" rule.