Fantasy Graphics is a graphics arts design consulting firm. Terri Bierman, its treasurer and vice president of finance, has prepared a classified balance sheet as of January 31, 2008, the end of its fiscal year. This balance sheet will be submitted with Fantasy Graphics' loan application to Booneville Trust & Savings Bank.
In the Current Assets section of the balance sheet, Terri reported a $100,000 receivable from Kent Miles, the president of Fantasy Graphics, as a trade account receivable. Kent borrowed the money from Fantasy Graphics in November 2006 for a down payment on a new home. He has orally assured Terri that he will pay off the account receivable within the next year. Terri reported the $100,000 in the same manner on the preceding year's balance sheet.