Pam, Inc., has 1,000,000 of notes payable due June 15, 20x6. At the financial statement date of December 31, 20x5, Pam signed an agreement to borrow up to 1,000,000 to refinance the notes payable on a long-term basis. The refinancing agreement is at the discretion of Pam, Inc. The financing agreement called for borrowings not to exceed 80% of the value of the collateral Pam was providing. At the date of issue of the December 31, 20x5, financial statements, the value of the collateral was 1,200,000 and was not expected to fall below this amount during 20x6. In its December 31, 20x5, balance sheet, Pam should classify notes payable as short-term, long-term? show the solution and explain.