On October 1, 2016, the City of Mizner issued $3,500,000 in 5%, general obligation bonds at 102 for the purpose of constructing an addition to City Hall. The premium was transferred to a debt service fund. A total of $3,450,000 was used to construct the addition, which was completed prior to June 30, 2017. The remaining funds were transferred to the debt service fund. The bonds were dated October 1, 2016, and paid interest on April 1 and October 1. The first of 20 annual principal payments of $175,000 is due October 1, 2017. The fiscal year for Mizner is July 1- June 30.

Question 1: What would be the amount of debt service expenditures reported in the fiscal year ended June 30, 2013?

1. 170,625
2. 341,250
3. 345,625

Question 2: In addition to a capital asset in the government-wide statement of assets, how would the construction cost of $3,450,000 be reported at year end?

1. As an expenditure of the capital project fund and an expense in the statement of activities
2. As an expenditure of the capital project fund
3. As a capital asset in the statement of net assets only