Crosetti's Electronics issues an £800,000, 8%, 10-year mortgage note on December 31, 2016, to help fi nance a plant expansion program. The terms of the note provide for annual installment payments, exclusive of real estate taxes and insurance, of £119,224.
Payments are due on December 31.
Instructions
(a) Prepare an installment payments schedule for the first 4 years.
(b) Prepare the entries for (1) the loan and (2) the first installment payment.
(c) Show how the total mortgage liability should be reported on the statement of financial position at December 31, 2017.