On May 1, 2018, Sheridan Company issued $1300000 of 8% bonds at 103, which are due on April 30, 2028.

Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Sheridans 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 Sheridans common stock was $35 per share and of the warrants was $2.

On May 1, 2018, Sheridan should record the bonds with a:

options:

premium of $39000.

discount of $14560.

discount of $13000.

discount of $52000.