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:

Capital

Financial assets or their financial value, including funds in deposit accounts, as well as the machinery, buildings, or equipment used in producing goods and services.

Nondiversifiable Risk

A type of risk that cannot be eliminated through diversification and affects all investments across the market.

Weighted Average

A mean where each value in the data set is multiplied by an assigned weight before the final calculation is performed.

Expected Return

Expected return is the anticipated amount of profit or loss an investment is likely to generate over a specific period.