On May 1, 2018, Marly Co. issued $2,500,000 of 7% bonds at 103, which are due on

April 30, 2028. Twenty detachable stock warrants entitling the holder to purchase for $40

one share of Marlys common stock, $15 par value, were attached to each $1,000 bond.

The bonds without the warrants would sell at 96. On May 1, 2018, the fair value of

Marlys common stock was $35 per share and of the warrants was $2.

On May 1, 2018, Marly should record the bonds with a

a. discount of $100,000.

b. discount of $25,000.

c. discount of $28,000.

d. premium of $75,000.