On May 1, 2014, Payne Co. issued $900,000 of 7% bonds at 102, which are due on April 30, 2024. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Paynes common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 96. On May 1, 2014, the fair value of Paynes common stock was $35 per share and of the warrants was $2.

1. On May 1, 2014, Payne should credit Paid-in Capital from Stock Warrants for

a. $36,560.

b. $36,720.

c. $37,080.

d. $65,000.

2. On May 1, 2014, Payne should record the bonds with a

a. discount of $36,000.

b. premium of $10,080.

c. discount of $18,720.

d. premium of $27,000.