Monica City paid $6,000,000 to its fiscal agent to be placed in an irrevocable trust to be used to service an outstanding $5,000,000 general obligation bond issue and those bonds are deemed defeased in-substance. The payment included $3,000,000 of proceeds from the issuance of new general obligation bonds and $3,000,000 that had been accumulated over the years to service the old debt. The city should report the payment to the fiscal agent in its Debt Service Fund as

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The payment of $6,000,000 to the fiscal agent includes $3,000,000 of proceeds from the issuance of new general obligation bonds and $3,000,000 that had been accumulated over the years. Therefore, $3,000,000 should be reported as "Other financing uses" since it is not an expenditure of the Debt Service Fund, but rather a transfer from another fund. The remaining $3,000,000 represents the actual payment for the old debt service, and this should be reported as an expenditure of the Debt Service Fund. Therefore, the city should report the payment as "Other financing uses of $3,000,000 and expenditures of $3,000,000."

Monica City Paid $6,000,000 to Its Fiscal Agent to Be