Tau Corporation issues loan notes of 130,000 on 1 January 2021. Redemption is to take place on
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Tau Corporation issues loan notes of €130,000 on 1 January 2021. Redemption is to take place on equal terms, five years later. The company decides to put aside an equal amount to be invested at 4.5% which will provide €130,000 on maturity. Tables show that €0.191735 invested annually will produce €1 in five years’ time.
Required: (a) Set up the loan-note redemption reserve account. (b) Calculate the annual investment for the sinking fund. (c) Maintain the loan-notes payable account. (d) Draft a memo to the board explaining the impact on retained earnings.
Related Book For
Applied Physics
ISBN: 978-0132109277
10th Edition
Authors: Dale ewen, Neill schurter, P. erik gundersen
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