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:

The correct answer is (c)

Explanation:

Bonds and stocks are used to generate financing. The city of Fargo has issued bonds to finance the construction of a new fire station. The bond is a type of debt funding and the premium must be transferred to a debt service fund. A debt service fund will be used to pay out the principal payments on those bonds.