Use the Following Information for Questions

question 28

Multiple Choice

Use the following information for questions
On May 1, 2016, Payne Co.issued $300,000 of 7% bonds at 103, which are due on April 30, 2026.Twenty detachable share warrants entitling the holder to purchase for $40 one share of Payne's ordinary shares, $15 par value, were attached to each $1,000 bond.The bonds without the warrants would sell at 96.On May 1, 2016, the fair value of Payne's shares was $35 per share and of the warrants was $2.
-On May 1, 2016, Payne should record bonds at payable

• A)discount of $296,640.
• B)discount of $288,000.
• C)discount of $300,000.
• D)premium of $309,000.

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Definitions:

Journal Entries

Financial transaction records written or typed into the journal, detailing the accounts affected and in what way.

Adjusting Entries

Entries made in the accounting journals to adjust income and expense accounts so that they comply with the accrual concept of accounting.

Note Payable

A written promise to pay a certain amount of money on demand or at a fixed or determinable future time.

Unearned Fees

Income received for services that have not yet been performed or delivered.