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  3. kappa corporation issues loan notes of £85,000 o

Kappa Corporation issues loan notes of £85,000 on 1 January 2036. Redemption is to take place...

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Accounting

Kappa Corporation issues loan notes of £85,000 on 1 January 2036. Redemption is to take place on equal terms, six years later. The company decides to put aside an equal amount to be invested at 5.5% which will provide £85,000 on maturity. Tables show that £0.147061 invested annually will produce £1 in six years’ time.

Required: Create:

  1. The loan-note redemption reserve ledger.
  2. The sinking fund investment ledger.
  3. The loan-notes payable ledger.
Notes to the financial statements explaining the sinking fund and redemption process.

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