Question 2 [30 points] Southgate 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 Southgate 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 24 : Southgate Inc.'s merchandise was sold to Gulf Corp. for $1,056,000 under credit terms of n/60, FOB destination. The cost of the merchandise was $832,000. b. June 1: $16,000 of uncollectible accounts receivable were written off c. November 8: Payments of outstanding accounts received totalled $280,000. d. December 31: While accounts were being adjusted on December 31, it was concluded that 2% of the outstanding accounts receivable would become uncollectible. General Journal Page Gj1 F Debit Credit Date Account/Explanation Accounts Receivable + - + - + Allowance for Doubtful Accts + - + 2014 a. March 4 : Southgate Inc.'s merchandise that cost $832,000 was sold to Gulf Corp. for $1,066,000 under credit terms of n/60, FOB destination. b. July 20: Wrote off uncollectible accounts receivable in the amount of $26,000. c. November 15 : Payments of outstanding accounts received totalled $410,000. d. December 31: While accounts were being adjusted on December 31, it was concluded that 2% of the outstanding accounts receivable would become uncollectible. General Journal Page Gj1 Date Account/Explanation F Debit Credit Accounts Receivable + 1 + - + -1 Allowance for Doubtful Accts + - + =