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% and were sold at 101.Which of the following entries should be made in the Capital Project Fund to record this event?

A) Debit Cash $2.02 million; Credit Bonds Payable $2 million and Premium on Bonds Payable $.02 million.
B) Debit Cash $2.02 million; Credit Bonds Payable $2 million and Other Financing Sources $.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 $.02 million.
Use the following information to answer questions # 8 and #9
Voters in Lincoln School District approved the construction of a new high school and approved a $10 million bond issue with a stated rate of interest of 6% to fund the construction.Bids were received and the low bid was $10 million.When the bonds were issued, they sold for face value less bond underwriting fees of $.5 million.The School Board voted to fund the balance of the construction by a transfer from the general fund.