Gamma Inc issues loan notes of €70,000 on 1 January 2007. Redemption is to take place...
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Accounting
Gamma Inc issues loan notes of €70,000 on 1 January 2007. 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 €70,000 on maturity. Tables show that €0.161082 invested annually will produce €1 in six years’ time.
Required:
- Annual sinking fund deposit
- Yearly investment balance
- Schedule of the loan-note redemption
- Impact on the equity section of the balance sheet
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