Alltech Company maintains a separate accounts receivable account for each customer.On June 18,Alltech provides $6100 of services on account to customer Anthony and $1000 of services on account to customer Walker.How will these two transactions affect the control and subsidiary accounts?
A) The control account, Accounts Receivable, will be increased with a debit of $7100.
B) The individual customer accounts in the subsidiary ledger will be increased with credits.
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 will have a debit balance and the subsidiary accounts will have a credit balance. This keeps the accounting equation in balance.

Question

Quizplus · Accepted Answer

Alltech Company maintains a separate account receivable account for each customer, so the transactions of $6100 and $1000 on account for Anthony and Walker, respectively, will increase the balances in their respective subsidiary accounts. However, at the same time, the control account, which is the aggregate of all customer accounts receivable balances, will also increase. Therefore, the correct option is A, which states that the control account, Accounts Receivable, will be increased with a debit of $7100. Option B is incorrect because it suggests that the customer accounts will be increased with credits, which is not true because the services were provided on account, and therefore, the customer owes the company money. Option C is also incorrect because the subsidiary balances will add up to the control account balance. Finally, option D is wrong because the control account should have a credit balance, not a debit balance, since accounts receivable are assets, and their balances increase with debits.

Alltech Company Maintains a Separate Accounts Receivable Account for Each