Megga Brands, Inc. borrowed $ 1,500,000 from Telcity Bank. The note payable has a term of 15

Question:

Megga Brands, Inc. borrowed $ 1,500,000 from Telcity Bank. The note payable has a term of 15 years and carries a 4% interest. Due to an inadequate credit score, Megga Brands agreed to several restrictive debt covenants. The debt agreement requires the company to maintain a compensating balance of $ 150,000. On December 15, Megga was forced to draw down on the compensating balance to meet working capital requirements. The loan became callable by Telcity on December 31 of the current year. On January 15, Telcity granted Megga a waiver and opted not to call its debt. Megga will release its annual to shareholders on February 15. How should Megga classify the $ 1,500,000 note payable on the December 31 balance sheet? Provide any necessary journal entries.
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