On December 31, 2014, Kate Holmes Company has $7,086,800 of short-term debt in the form of notes payable to Gotham State Bank due in 2015. On January 28, 2015, Holmes enters into a refinancing agreement with Gotham that will permit it to borrow up to 54% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $5,047,000 in May to a high of $8,140,000 in October during the year 2015. The interest cost of the maturing short-term debt is 15%, and the new agreement calls for a fluctuating interest rate at 1% above the prime rate on notes due in 2019. Holmes