Omicron Enterprises issues loan notes of $95,000 on 1 January 2017. Redemption is to take place...
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Omicron Enterprises issues loan notes of $95,000 on 1 January 2017. 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 $95,000 on maturity. Tables show that $0.185093 invested annually will produce $1 in five years’ time.
Required:
Calculate the annual sinking fund investment.
Record the journal entries for the investment each year.
Prepare the loan-notes ledger account.
Show the effect on the equity section of the balance sheet.
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