Delta Enterprises issues loan notes of $100,000 on 1 January 2008. Redemption is to take place on equal terms, five years later. The company decides to put aside an equal amount to be invested at 6% which will provide $100,000 on maturity. Tables show that $0.177274 invested annually will produce $1 in five years’ time.

Required:

1. Prepare the loan-note redemption reserve account.
2. Set up the loan-note sinking fund investment account.
3. Calculate the annual investment required.
4. Show the impact on the balance sheet each year.