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Rosedale Corp. obtained a $50,000 loan from Second Capital Bank on January 1, 2019. It purchased a piece of heavy equipment for $48,000 on the same day. The loan bears interest at 6% per year on the unpaid balance and is repayable in three annual blended payments of $18,705 on December 31 each year.
Required:
- Prepare the journal entries to record the following transactions:
- Receipt of loan proceeds from the bank
- Purchase of the equipment.
- Prepare the loan repayment schedule.
- Prepare the journal entry to record the first loan payment.
Provide descriptions for journal entries. General ledger account numbers are not necessary.
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