On December 31, 2014, Gibson Company has $18,200,000 of short-term debt in the form of notes payable to Blue Lagoon State Bank due in 2015. On January 28, 2015, Gibson enters into a refinancing agreement with Blue Lagoon that will permit it to borrow up to 60% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $15,600,000 in May to a high of $20,800,000 in October during the year 2015. The interest cost of the maturing short-term debt is 15%, and the new agreement calls for a fluctuating interest at 1% above the prime rate on notes due in 2019. Gibson intends to use the refinancing agreement to the fullest extent possible. Gibson's December 31, 2014, balance sheet is issued on February 15, 2015.
Instructions
Prepare a partial balance sheet for Gibson at December 31, 2014, showing how its $18,200,000 of shortterm debt should be presented, including note disclosure.