On January 1, 2016, the City of Pittsburgh is planning on issuing $1,000,000 in 10 year term bonds. The bonds will be issued at a 1% premium and the coupon rate of 4%. Assuming these facts are known on January 1 and the bond will pay interest on July 1 and January 1 of every year, what budgetary entry should the debt service fund make on January 1, 2016 to account for these bonds?

Group of answer choices

Debit Estimated OFS- Premium on Bonds $10,000

Debit Budgetary Fund Balance $30,000

Credit Appropriations $40,000

Debit Estimated OFS- Premium on Bonds $10,000

Debit Budgetary Fund Balance $10,000

Credit Appropriations $20,000

Debit Budgetary Fund Balance $40,000

Credit Appropriations $40,000

Debit Budgetary Fund Balance $20,000

Credit Appropriations $20,000