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How would the underwriting fee be accounted

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Question - Salt City issued $5 billion of bonds at face value to fund the reconstruction of the major interstate highways in and around their city. The bond underwriters withheld $2 million for underwriting fees and remitted the balance to the City. Assuming the City maintains its books and records in a manner that facilitates the preparation of fund financial statements, how would the underwriting fee be accounted for in the capital projects fund?

a. Reduce Other Financing Sources by $2 million.

b. Reduce Bonds Payable by $2 million.

c. Increase Expenditures by $2 million.

d. It would not be accounted for in the capital projects fund.

Reference no: EM133093584

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