Response to the following problem:
Copper Corp. obtained a $500,000 loan from Last Chance Bank on January 1, 2016. It purchased a piece of heavy equipment for $450,000 on January 2, 2016 and paid some accounts payable with the balance on the same day. The loan bears interest at 4% per year on the unpaid balance and is repayable in three annual blended payments of $187,381 on December 31 each year, starting in 2017 (that is, no payments are required until two years after receiving the loan). Assume interest accrues in the meantime.
Required:
1. Prepare the journal entries to record the following transactions:
a. Receipt of loan proceeds from the bank
b. Purchase of the equipment and payment of the accounts payable.
2. Prepare the loan repayment schedule.
3. Prepare the journal entry to record the first loan payment.
4. Prepare a partial balance sheet showing the loan liability at December 31, 2016.