On Excel spreadsheet

Caprio Inc. sells $500,000 of 10% bonds on June 1, 2015. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2020. The bonds yield 8%. On October 1, 2016, Caprio buys back $200,000 (face value) of bonds for $210,000 in cash (notincluding accrued interest which was paid separately also in cash). Provide the following:

A.The present value of the bond payable is $ ______________________ on June 1, 2015. Round to the nearest dollar.

B.Preparea well-labeled schedule (with debits/creditsshown) for the journal entriesthrough thelifeoftheBond.

C.Give all journal entries for:

• 6/1/15
• 12/1/15
• 12/31/15
• 6/1/16
• 10/1/16 Update
• 10/1/16 accrued interest payment
• 10/1/16 redemption

Templates for Time Value of Money Bonds: a) present value; b) entry, c) schedule a) Selling Price: present value single sum of principal + present value annuity of interest payments -principal(pn,yield)+(principalxcouponrate)(Pn,yield) principal = face value = maturity value coupon rate = stated rate = nominal rate market rate = yield = effective rate = internal rate of return, IRR b) Entry: Cash = selling price Discount on BP or Premium on BP Bonds Payable = face value c) Amortization Schedule: Notes Payable: a) present value, b) entry, c) schedule a) Present value = discount all future cash flows at yield = cash equivalent value of what is being financed such as equipment if had paid today with cash and thus had no interest or financing involved b) Entry: Asset = present value (Machine, Land, etc) Discount on Note Pay Note Payable = face value c) Amortization schedule: principal and interest: Notes Receivable: a) present value, b) entry, c) schedule a) Present Value = discount all future cash flows at yield = cash equivalent value of the value of what is being given in exchange for accepting a note for future payments instead of cash today b) Entry: Note Receivable = face value Discount on Note Receiv Service Rev, etc = value of what given up c) Amortization schedule: Leases: a) present value, b) entry, c) schedule a) Present value = discount all future cash flows at yield = cash equivalent value of asset being financed as if had paid today with cash and thus had no interest or financing involved b) Entry: Leased Asset = present value Lease Obligation = present value c) Schedule of payments (part going to interest and rest to pay down obligation) while finance