Answer:
price of the bonds:
$1,000,000 / (1 + 6%)⁶ = $704,961
$50,000 x 4.9173 (PVIFA, 6%, 6 periods) = $245,865
August 1, 2019, bonds sold at a discount
Dr Cash 950,826
Dr Discount on bonds payable 49,174
Cr Bonds payable 1,000,000
Assuming straight amortization of discount = $49,174 / 6 = $8,195.67
February 1, 2020, first coupon payment
Dr Interest expense 58,196
Cr Cash 8,196
Cr Discount on bonds payable 50,000
August 1, 2020, second coupon payment
Dr Interest expense 58,195
Cr Cash 8,195
Cr Discount on bonds payable 50,000
October 1, 2020
Dr Bonds payable 200,000
Dr Interest expense 3,879
Dr Loss on redemption of bonds 24,667
Cr Cash 228,000
Cr Discount on bonds payable 546
