Alltech Company maintains a separate accounts receivable account for each customer. On June​ 18, Alltech provides $ 6 comma 200 of services on account to customer Anthony and $ 1 comma 600 of services on account to customer Walker. How will these two transactions affect the control and subsidiary​ accounts?

Question

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Part 1
A.
The individual customer accounts in the subsidiary ledger will be increased with credits.
B.
The control account will have a debit balance and the subsidiary accounts will have a credit balance. This keeps the accounting equation in balance.
C.
After posting these​ transactions, the sum of the balances in subsidiary accounts receivable will not equal the control account balance.
D.
The control​ account, Accounts​ Receivable, will be increased with a debit of $ 7 comma 800.

Answer 1

To analyze how the transactions affect the control and subsidiary accounts, we'll break down the transactions and their impact.

• Alltech provided services totaling $6,200 to customer Anthony.
• Alltech provided services totaling $1,600 to customer Walker.

1. Control Account: The control account for accounts receivable reflects the total amount owed to the company by all customers. In this case, the total services provided on account is $6,200 + $1,600 = $7,800. This means that the control account, Accounts Receivable, will be increased by $7,800. This is a debit entry.

2. Subsidiary Accounts: Each individual customer's account in the subsidiary ledger will be increased (debited) as follows:

   • Customer Anthony's account will be increased by $6,200.
   • Customer Walker's account will be increased by $1,600.

Now to review the options provided:

A. Incorrect. The individual customer accounts in the subsidiary ledger will be increased with debits, not credits.

B. Incorrect. The control account will have a debit balance (which is correct), but the subsidiary accounts will also have debit balances, not credit balances.

C. Incorrect. After posting these transactions, the sum of the balances in the subsidiary accounts receivable will equal the control account balance, as both should reflect the total of $7,800.

D. Correct. The control account, Accounts Receivable, will be increased with a debit of $7,800.

Thus, the correct answer is D.