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Question: (Accounting and financial reporting cycle) In an effort to improve its recreation facilities and to provide employment during the recession, Empire State created a Trails Special Revenue Fund. By law, all traffic fines collected by the state police were directed to be placed in the Trails Special Revenue Fund and used to pay only the salaries of individuals employed to create new hiking trails in Placid State Park. The Special Revenue Fund had the following transactions and events during calendar year 2013. Prepare journal entries to record these transactions and events, and prepare a statement of revenues, expenditures, and changes in fund balance for the Trails Special Revenue Fund for 2013.
1. The legislature adopted and the governor approved a budget with estimated traffic fine revenues of $900,000 and parks and recreation program salaries of $880,000.
2. Received parking fine revenues of $890,000 during the year.
3. Paid salaries of $870,000 during the year.
4. Incurred a liability of $7,000 for salaries earned by employees on December 30 and 31 that will be paid in early January 2014.
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