On December 31,2016, Carrboro Textile Company had short-term debt in the form of notes payable totaling $600,000.

Question:

On December 31,2016, Carrboro Textile Company had short-term debt in the form of notes payable totaling $600,000. These notes were due on June 1, 2017. Carrboro expected to refinance these notes on a long term basis. On February' 1,2017, Carrboro entered into an agreement with Worldwide Life Insurance Company whereby Worldwide will lend Carrboro $450,000, payable in 5 years at 12%. The money will be available to Carrboro on May 20, 2017. Carrboro issues its December 31,2016, year-and on March 2, 2017.
Required:
1. Show' how the $600,000 notes payable will be classified on Carrboro Textile’s on December 31,2016.
2. Next Level What is necessary' in order for a company to exclude short-term debt that is expected to be refinanced on a long-term basis from the current liability classification?
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