S9-11. (Learning Objective 2: Issuing bonds payable; accruing interest; amortizing bonds by the effective interest method) Villa Drive-Ins Ltd. issued a $520,000, 8%, 10-year bond payable on July 1, 20X0, when the market rate was 10%. Also assume that Villa’s accounting year ends on December 31. Journalize the following transactions for Villa Drive-Ins Ltd., including an explanation for each entry:

a. Issuance of the bond payable on July 1, 20X0.

b. Accrual of interest expense and amortization of bonds on December 31, 20X0. (Use the effective interest amortization method, and round amounts to the nearest dollar.)

c. Payment of the first semi-annual interest amount on January 1, 20X1.