On December 30, 2006, Fort, Inc. issued 1,000 of its 8%, ten-year, $1,000 face value bonds with detachable stock warrants at par. Each bond carried a detachable warrant for one share of Fort’s common stock at a specified option price of $25 per share. Immediately after issuance, the market value of the bonds without the warrants was $1,080,000 and the market value of the warrants was $120,000. In its December 31, 2006 balance sheet, what amount should Fort report as bonds payable?

  1. $1,000,000
  2. $ 975,000
  3. $ 900,000
  4. $ 880,000