Tau Ltd issues loan notes of €130,000 on 1 January 2044. Redemption is to take place...
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Accounting
Tau Ltd issues loan notes of €130,000 on 1 January 2044. Redemption is to take place on equal terms, six years later. The company decides to put aside an equal amount to be invested at 3% which will provide €130,000 on maturity. Tables show that €0.161082 invested annually will produce €1 in six years’ time.
Required:
Prepare the loan-note redemption reserve account.
Set up the loan-note sinking fund investment account.
Calculate the annual investment required.
Show the impact on the balance sheet each year.
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