Sugar City Issued $2 Million of Bonds to Fund the Construction

Sugar City issued $2 million of bonds to fund the construction of a new city office building. The bonds have a stated rate of interest of 5 percent and were sold at 101. Which of the following entries should be made in the capital projects fund to record this event?

A) Debit Cash $2.02 million; Credit Bonds payable $2 million and Premium on bonds payable $0.02 million.
B) Debit Cash $2.02 million; Credit Bonds payable $2 million and Other financing sources $0.02 million.
C) Debit Cash $2.02 million; Credit Other financing sources $2.02 million.
D) Debit Cash $2.02 million; Credit Other financing sources $2 million and Revenue $0.02 million.