If the individual subsidiary ledger accounts contained the following data:Cadence Company, Vendor, $200, credit balanceFranklin Enterprises, Customer, $750, debit balanceMarcelo Construction, Client, $125, debit balancePeyton Supplies, Supplier, $375, credit balanceThe accounts receivable (A/R) control account and the accounts payable
(A/P) control account balances would be

A) A/R, $1,375; A/P, $375
B) A/R, $525; A/P, $175
C) A/R, $875; A/P, $575
D) A/R, $750; A/P, $700

Question

Hinton Owsley · Accepted Answer

Final Answer : C, Explanation :  The A/R control account represents the total amount owed to the company by its customers, while the A/P control account represents the total amount the company owes to its suppliers.We can determine the balances of these accounts by adding up the balances of the individual subsidiary accounts within each category, and then applying the appropriate debit or credit balance based on whether the account represents money owed to the company or money owed by the company.For A/R:Franklin Enterprises, $750 debitMarcelo Construction, $125 debitTotal debits = $875For A/P:Cadence Company, $200 creditPeyton Supplies, $375 creditTotal credits = $575To find the final balance for each control account, we can subtract the total credits from the total debits for each category:A/R = $875 - 0 = $875 (no credits to subtract)A/P = $0 - $575 = ($575) (flip the sign of the credits)Therefore, the correct answer is C) A/R, $875; A/P, $575.

Definitions

Learning Objectives

Learning Objectives

Related questions