Short-Term Debt Expected to Be Refinanced

On December 31, 2019, Carrboro Textile Company had short-term debt in the form of notes payable totaling $450,000. These notes were due on June 1, 2020. Carrboro expected to refinance these notes on a long-term basis. On February 1, 2020, Carrboro entered into an agreement with Worldwide Life Insurance Company whereby Worldwide will lend Carrboro $360,000, payable in 5 years at 12%. The money will be available to Carrboro on May 20, 2020. Carrboro issues its December 31, 2019, year-end financial statements on March 2, 2020.

Required:

Question Content Area

1. Show how the $450,000 notes payable will be classified on Carrboro Textiles balance sheet on December 31, 2019.

CARRBORO TEXTILE COMPANY Partial Balance Sheet December 31, 2019

Current Liabilities:
Notes payable
Long-Term Liabilities:
Notes payable