On December 31, 2015, Frye Co. has 4,000,000 of short-term notes payable due on February 28, 2016. On December 23, 2015, Frye arranged a line of credit with County Bank which allows Frye to borrow up to 3,500,000 at one percent above the prime rate for three years. On February 2, 2016, Frye borrowed 2,500,000 from County Bank and used 500,000 additional cash to liquidate 3,000,000 of the short-term notes payable. The amount of the short-term notes payable that should be reported as current liabilities on the December 31, 2015 statement of financial position which is issued on March 15, 2016 is

$0.

$500,000.

$1,000,000.

$4,000,000.