Lambda Enterprises issues loan notes of €90,000 on 1 January 2014. Redemption is to take place on equal terms, three years later. The company decides to put aside an equal amount to be invested at 4.5% which will provide €90,000 on maturity. Tables show that €0.297073 invested annually will produce €1 in three years’ time.

Required: Prepare the following entries:

1. Loan-note redemption reserve account.
2. Sinking fund investment account.
3. Loan-notes account.
4. Extract from the cash flow statement showing annual investment.