On December 31, 2013, Carrboro Textile Company had shortterm debt in the form of notes payable totaling $600,000. These notes were due on June 1, 2014. Carrboro expected to refinance these notes on a long-term basis. On February 1, 2014, 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, 2014. Carrboro issues its December 31, 2013, year-end financial statements on March 2, 2014.
Required:
1. Show how the $600,000 notes payable will be classified on Carrboro Textile's balance sheet on December 31, 2013.
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?