On May 1, 2018, Payne Co. issued $1,500,000 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 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, 2018, the fair value of Paynes common stock was $35 per share and of the warrants was $2.

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

discount of $ 9,000.

discount of $16,800.

premium of $27,000.

discount of $36,000.