Use the Following to Answer the Next Five Questions

Use the following to answer the next five questions:
On October 1, 2013, the City of Mizner issued $3,500,000 in 4%, general obligation bonds at 101 for the purpose of constructing an addition to City Hall. The premium was transferred to a debt service fund. A total of $3,475,000 was used to construct the addition, which was completed prior to June 30, 2014. The remaining funds were transferred to the debt service fund. The bonds were dated October 1, 2013, and paid interest on April 1 and October 1. The first of 20 annual principal payments of $175,000 is due October 1, 2014. The fiscal year for Mizner is July 1- June 30.
-In addition to a $3,500,000 liability in the government-wide Statement of Net Assets,how would the bond sale be reported?

A) As a $3,535,000 other financing source in the capital projects fund, a $35,000 other financing use in the capital projects fund, a $35,000 other financing source in the debt service fund.
B) As a $3,500,000 other financing source in the capital projects fund, a $35,000 other financing source in the debt service fund, and as a $3,500,000 liability in the debt service fund.
C) As a $3,500,000 revenue in the capital projects fund, a $35,000 revenue in the debt service fund, and a $3,500,000 expenditure in the debt service fund.
D) As a $3,475,000 revenue in the capital projects fund and a $25,000 revenue in the debt service fund.