On May 1, 2014, Payne Co. issued $900,000 of 7% bonds at 103, which are due on April 30, 2024. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Payne's 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 Payne's common stock was $35 per share and of the warrants was $2.

A. (2 Points) Using the proportional method, record the issuance of the bonds and warrants.

B. (2 Points) If the market price of the warrants without the bonds cannot be determined, use the incremental method to record the issuance of the bonds and warrants.