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Iota Ltd issues loan notes of £85,000 on 1 January 2012. Redemption is to take place...

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Accounting

Iota Ltd issues loan notes of £85,000 on 1 January 2012. Redemption is to take place on equal terms, six years later. The company decides to put aside an equal amount to be invested at 5.5% which will provide £85,000 on maturity. Tables show that £0.147061 invested annually will produce £1 in six 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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