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Eta Enterprises issues loan notes of £115,000 on 1 January 2056. Redemption is to take place...

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Accounting

Eta Enterprises issues loan notes of £115,000 on 1 January 2056. Redemption is to take place on equal terms, five years later. The company decides to put aside an equal amount to be invested at 4.5% which will provide £115,000 on maturity. Tables show that £0.191735 invested annually will produce £1 in five years’ time.

Required: Prepare the following in table format: (a) Loan-note redemption reserve account. (b) Loan-note sinking fund investment account. (c) Loan-notes account. (d) Extracts from the equity section of the balance sheet.

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