500L is more like a typical 3rd grade reader, but a 2nd grade text level. At the K/1 level, Berenstain Bears are generally read-alouds. He is well beyond that level, just based on the snippets you've described. K/1 is largely cvc, cvce, some of the more common dipthongs, and about 100 of the 220 Dolch sight words, with most of those categories weighted toward first grade. Though of course, some districts run behind or ahead.

...pronounced like the long vowel and first letter of the alphabet...