Ensign Plus Ltd have recently purchased new premises in order to expand their inventory space. The cost of the premises was $1 280 000 and on 1 November they financed the purchase with a 7% loan to Hermitage Bank to be paid off over five years. Ensign paid a cash deposit of $350000 and the agreement of the loan stipulates repayments will be $18415 monthly. The first payment is due on 1 December. Assume interest is calculated monthly.

Required

A. Prepare a general journal entry to record the payment due on 1 December.

B. Calculate the outstanding principal after the first payment is made on 1 December.