on december 31 2013 carrboro textile company had shortterm debt in the form of notes 3387180

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?

 

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