Use the Following Information for Questions 55 and 56

question 6

Multiple Choice

Use the following information for questions 55 and 56.
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.
-On May 1, 2014, Payne should record the bonds with a

• A) discount of $36,000.
• B) discount of $10,080.
• C) discount of $ 9,000.
• D) premium of $27,000.

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Definitions:

Real Estate Taxes

Taxes imposed by local government agencies on properties based on the assessed value of the property.

State Income Taxes

Taxes imposed on individuals or entities by individual states on the income earned within that state.

Tax-Deferred Savings

Investment accounts, like IRAs and 401(k)s, where contributions and earnings are tax-exempt until withdrawal, typically at retirement.

Flexible Spending Account

A special account you put money into that you use to pay for certain out-of-pocket health care costs, using pre-tax dollars, thus reducing taxable income.