Dynamic Industries Ltd have recently purchased new premises in order to expand their warehouse space. The cost of the premises was \($1\) 500 000 and on 1 November they financed the purchase with a 6.5% loan to Major Bank to be paid off over five years. Dynamic paid a cash deposit of \($500\) 000 and the agreement of the loan stipulates repayments will be \($18\) 588 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.