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Reporting Bonds Using the Fair Value Option Mitchell Inc. issued 44 of its 6%,$1,000 bonds on January 1 of Year 1 for $42,827. The bonds pay cash interest semiannually each June 30 and December 31 and were issued to yield 7%. The bonds mature in three years on December 31, and the company uses the effective interest method to amortize bond discounts or premiums. On January 1 of Year 1, Mitchell Inc. elects to account for the bonds using the fair value option. a. Record the issuance of bonds on January 1 of Year 1. b. Record the interest payment on June 30 of Year 1. c. Record the interest payment on December 31 of Year 1. d. At December 31 of Year 1 , the market rate on the bonds drops to 7.5% due to a general increase in market risk. Record the adjustment of bonds payable to fair value. - Note: Round your answers to the nearest whole dollar