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Alpha Ltd issues loan notes of $85,000 on 1 January 2073. Redemption is to take place...

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Accounting

Alpha Ltd issues loan notes of $85,000 on 1 January 2073. Redemption is to take place on equal terms, four years later. The company decides to put aside an equal amount to be invested at 5% which will provide $85,000 on maturity. Tables show that $0.232012 invested annually will produce $1 in four years’ time.

Required: (a) Loan-note redemption reserve account. (b) Loan-note sinking fund investment account. (c) Loan-notes account. (d) Extract from the retained profits account.

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