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Epsilon Ltd issues loan notes of 20,000 on 1 January 2009. Redemption is to take place on equal terms, three years later. The company decides
Epsilon Ltd issues loan notes of £20,000 on 1 January 2009. Redemption is to take place on equal terms, three years later. The company decides to put aside an equal amount to be invested at 5% which will provide £20,000 on maturity. Tables show that £0.292102 invested annually will produce £1 in three years’ time.
Required: (a) Record the entries for the annual investment in the sinking fund. (b) Show the amortization schedule for the loan-note. (c) Prepare the loan-notes account. (d) Present the extract from the retained profits account.
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