Iota Ltd issues loan notes of €75,000 on 1 January 2035. Redemption is to take place...
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Iota Ltd issues loan notes of €75,000 on 1 January 2035. Redemption is to take place on equal terms, four years later. The company decides to put aside an equal amount to be invested at 5% which will provide €75,000 on maturity. Tables show that €0.232012 invested annually will produce €1 in four years’ time.
Required: Prepare the following entries:
- Loan-note redemption reserve account.
- Sinking fund investment account.
- Loan-notes account.
- Extract from the cash flow statement showing annual investment.
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