Branch Company, a building materials supplier, has $17,800,000 of notes payable due April 12, 2014. At December 31, 2013, Branch signed an agreement with First Bank to borrow up to $17,800,000 to refinance the notes on a long-term basis. The agreement specified that borrowings would not exceed 85% of the value of the collateral that Branch provided.
At the date of issue of the December 31, 2013, financial statements, the value of Branch's collateral was $19,400,000. On its December 31, 2013, balance sheet, Branch should classify the notes as follows:
a.$2,670,000 short-term and $15,130,000 current liabilities.
b. $17,800,000 of long-term liabilities.
c. $16,490,000 long-term and $1,310,000 current liabilities.
d. $17,800,000 of current liabilities.
