Nu Corporation issues loan notes of £120,000 on 1 January 2016. Redemption is to take place...
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Nu Corporation issues loan notes of £120,000 on 1 January 2016. Redemption is to take place on equal terms, six years later. The company decides to put aside an equal amount to be invested at 3% which will provide £120,000 on maturity. Tables show that £0.155045 invested annually will produce £1 in six years’ time.
Required: (a) Prepare the loan-note redemption reserve account. (b) Create the sinking fund investment account. (c) Set up the loan-notes account. (d) Provide extracts from the retained earnings and cash flow statement.
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