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Alpha Ltd issues loan notes of £150,000 on 1 January 2050. Redemption is to take place...

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Accounting

Alpha Ltd issues loan notes of £150,000 on 1 January 2050. 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 £150,000 on maturity. Tables show that £0.185093 invested annually will produce £1 in five years’ time.

Required:

  1. Annual sinking fund deposit calculation.
  2. Yearly investment balance record.
  3. Schedule for loan-note redemption.
  4. Effect on the equity section of the balance sheet.

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