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Alex Corp issues loan notes of £50,000 on 1 January 2005. Redemption is to take place...

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Accounting

Alex Corp issues loan notes of £50,000 on 1 January 2005. Redemption is to take place on equal terms, five years later. The company decides to put aside an equal amount to be invested at 4% which will provide £50,000 on maturity. Tables show that £0.185093 invested annually will produce £1 in five years’ time.

Required: Prepare the following: (a) Loan-note redemption reserve account (b) Loan-note sinking fund investment account (c) Loan-notes account (d) Extract of the cash flow statement showing the annual investment

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