Clare Company is constructing a new warehouse facility. On May 15, 2019, the company issued $2,500,000 of short-term notes payable due March 15, 2020, to finance construction of the warehouse. On December 31, 2019, Clare intends to refinance the shortterm notes payable by issuing long-term debt. However, because Clare has excess cash on January 12, 2020, it retires $800,000 of the short-term notes payable.
On January 20, 2020, Clare completes a $5,000,000 long-term debt offering. Clare uses the proceeds from the long-term debt to:
• Retire the remaining $1,700,000 of shortterm notes payable on March 15, 2020
• Pay $3,300,000 of warehouse construction costs during 2020
As the financial statements for 2019 are being prepared, Steve Share, president of Clare Company, wants to make sure that all $2,500,000 of short-term notes payable are reclassified as long-term because the company borrowed enough to repay the total amount.
As the accountant for Clare Company, you know that you can classify short-term debt that is going to be refinanced as a long-term liability but are not certain how much.

Directions
Research the related generally accepted accounting principles and prepare a short memo to the president of Clare Company that describes how the short-term notes payable should be classified in the 2019 balance sheet. Cite your references and applicable paragraph numbers.