Clay Corp. sold $500,000 of 8%, five-year bonds for $550,000. The purchasers were issued 2,000 detachable warrants,

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Question:

Clay Corp. sold $500,000 of 8%, five-year bonds for $550,000. The purchasers were issued 2,000 detachable warrants, each of which was for one share of Clay's $5 par value common stock at $12 per share. Shortly after issuance, the warrants sold at a market price of $10 each. What amount of premium on the bonds should Clay record at issuance?

A.$20,000

B.$24,000

C.$30,000

D.$50,000