Question 2 [30 points] Ludwig Inc. began operations on January 1, 2013. During the next two years, the company completed a number of transactions involving credit sales, accounts receivable collections and bad debts. Prepare journal entries to record Ludwig Inc.'s 2013 and 2014 summarized transactions and the adjusting entries to record bad debt expense at the end of each year (December 31). Enter the letter of the transaction as the description for the journal entry. Dates must be entered in the format dd/mmm (ie. 15/Jan). T-Accounts have been provided for your calculations, but will not be marked. The transactions are summarized as follows (assume a perpetual inventory system): 2013 a. January 26 : Ludwig Inc. sold merchandise to Stake Technology Inc. for $862,000 under credit terms of n/60, FOB destination. The merchandise had cost $672,000. b. May 9: Wrote off uncollectible accounts receivable in the amount of $22,000. c. October 4 : Received cash of $240,000 in payment of outstanding accounts receivable. d. December 31: While accounts were being adjusted on December 31, it was concluded that 1.5% of the outstanding accounts receivable would become uncollectible. General Journal Account/Explanation Page Gj1 F Debit Credit Date Accounts Receivable + + - a. January 26 : Ludwig Inc. sold merchandise to Stake Technology Inc. for $862,000 under credit terms of n/60, FOB destination. The merchandise had cost $672,000. b. May 9: Wrote off uncollectible accounts receivable in the amount of $22,000. c. October 4 : Received cash of $240,000 in payment of outstanding accounts receivable. d. December 31: While accounts were being adjusted on December 31, it was concluded that 1.5% of the outstanding accounts receivable would become uncollectible. General Journal Account/Explanation Page Gj1 F Debit Date Credit Accounts Receivable + = + - + -1 Allowance for Doubtful Accts + - += 2014 a. February 5: Ludwig Inc.'s merchandise that cost $608,000 was sold to Stake Technology Inc. for $788,000 under credit terms of n/60, FOB destination. b. July 21 : Wrote off uncollectible accounts receivable in the amount of $28,000. c. October 11 : Payments of outstanding accounts received totalled $430,000. d. December 31: While accounts were being adjusted on December 31, it was concluded that 1.5% of the outstanding accounts receivable would become uncollectible. General Journal Account/Explanation Page Gj1 F Debit Credit Date Accounts Receivable + - + - Allowance for Doubtful Accts + - +