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

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 balance​The 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

Quizplus · Accepted Answer

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 debit
Marcelo Construction, $125 debit
Total debits = $875

For A/P: 
Cadence Company, $200 credit
Peyton Supplies, $375 credit
Total credits = $575

To 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.

If the Individual Subsidiary Ledger Accounts Contained the Following Data:Cadence