Crocker plc owes Yaeger Ltd. a 10-year, 10% note in the amount of £330,000 plus £33,000 of accrued interest. The note is due today, December 31, 2022. Because Crocker is in financial trouble, Yaeger agrees to forgive the accrued interest, and £30,000 of the principal, and to extend the maturity date to December 31, 2025. Interest at 10% of revised principal will continue to be due on 12/31 each year. Given Crocker’s financial difficulties, the market rate for its loans is 12%.

Instructions

a. Prepare the amortization schedule for the years 2022 through 2025.

b. Prepare all the necessary journal entries on the books of Crocker for the years 2022, 2023, and 2024.