The City of Fargo issued general obligation bonds to finance construction of a new fire station.The bonds were issued at a premium.In the fire station capital projects fund,the premium should be transferred to:

Question

Quizplus · Accepted Answer

The premium received from the issuance of bonds is a source of revenue for the government entity, and it must be used to pay for the costs associated with the issuance of the bonds, such as underwriting and legal fees. The premium also increases the total amount of funds available for debt service, which is the repayment of the principal and interest on the bonds. Therefore, the premium should be transferred to a debt service fund, which is used to account for the accumulation and payment of the principal and interest on bonded debt.

The City of Fargo Issued General Obligation Bonds to Finance