(Learning Objectives 2: Issuing bonds payable; accruing interest; amortizing bonds by the effective interest method) Sunset Drive-Ins Ltd. issued a $500,000, 8%, 10-year bond payable on July 1, 20X0 when market rate was 10%. Also assume that Sunset’s accounting year ends on December 31. Journalize the following transactions for Sunset 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 fi rst semi-annual interest amount on January 1, 20X1.