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Gamma Ltd issues loan notes of 95,000 on 1 January 2075. Redemption is to take place on equal terms, six years later. The company decides

Gamma Ltd issues loan notes of £95,000 on 1 January 2075. 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% which will provide £95,000 on maturity. Tables show that £0.161082 invested annually will produce £1 in six years’ time.

Required:

  1. Annual sinking fund deposit calculation.
  2. Yearly investment balance record.
  3. Schedule for loan-note redemption.
  4. Effect on the equity section of the balance sheet.

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