Question: Fifty-Six Media has a $36,000 note payable due in May of 2014. At December 31, 2013, Fifty-six entered an arrangement with the local bank to

Fifty-Six Media has a $36,000 note payable due in May of 2014. At December 31, 2013, Fifty-six entered an arrangement with the local bank to borrow up to $36,000 to refinance the note for two additional years. The arrangement indicated that borrowings can not exceed 80% of the value of the collateral Fifty- Six provided. The land specified as collateral was valued at $40,000. On its December 31, 2013, balance sheet Branch should classify the notes as:

a. $32,000 long term- and $ 4,000 short-term obligations

b. $18,000 short-term and $18,000 as long term obligations

c. 36,000 of notes payable as short - term obligations

d. $36,0000 of notes payable as long-term obligations.

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