Arco, Inc Issued $300,000 of 4%, 10-Year Convertible Bonds at Par

Arco, Inc. issued $300,000 of 4%, 10-year convertible bonds at par on July 1, 2018. Each bond has a par value of $1,000. The bonds include the option for bondholders to convert each bond into 50 $1 par value shares of common stock beginning two years after the date of issue. The market price of the stock at the time of issue is $23 per share. What is the correct journal entry for the issue?

A) $$\begin{array} { | c | l | r | r | } \hline \text { Date } &{ \text { Account } } & { \text { Debit } } & { \text { Credit } } \\\hline \text { July 1,2018 } & \text { Cash } & 300,000 & \\\hline & \text { Discount on Bonds Payable } & 45,000 & \\\hline & \text { Bonds Payable } & & 300,000 \\\hline & \begin{array} { l } \text { Add. Paid-in Capital-Bene. } \\\text { Conv. Option }\end{array} & & 45,000 \\\hline\end{array}$$
B) $$\begin{array} { | c | l | r | r | } \hline \text { Date } &{ \text { Account } } & { \text { Debit } } &{ \text { Credit } } \\\hline \text { July 1,2018 } & \text { Cash } & 345,000 & \\\hline & \text { Premium on Bonds Payable } & & 45,000 \\\hline & \text { Bonds Payable } & & 300,000 \\\hline\end{array}$$
C) $$\begin{array} { | c | l | c | r | } \hline \text { Date } &{ \text { Account } } & \text { Debit } & { \text { Credit } } \\\hline \text {July 1,2018 } & \text { Cash } & 345,000 & \\\hline & \text { Bonds Payable } & & 300,000 \\\hline & \begin{array} { c } \text { Add. Paid-in Capital-Bene. } \\\text { Conv. Option }\end{array} & & 45,000 \\\hline\end{array}$$
D) $$\begin{array} { | c | l | r | r | } \hline \text { Date } & { \text { Account } } &{ \text { Debit } } & { \text { Credit } } \\\hline \text { July 1,2018 } & \text { Cash } & 300,000 & \\\hline & \text { Discount on Bonds Payable } & 45,000 & \\\hline & \text { Bonds Payable } & & 345,000 \\\hline\end{array}$$