Alltech Company maintains a separate accounts receivable account for each customer. On June 18, Alltech provides $6,300 of services on account to customer Anthony and $1,200 of services on account to customer Walker. How will these two transactions affect the control and subsidiary accounts?

Question

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Each transaction on account increases the individual customer's subsidiary account with a debit and increases the Accounts Receivable control account with a credit. Therefore, the $6,300 and $1,200 transactions will increase the Accounts Receivable control account with a debit of $7,500. The subsidiary accounts will be updated with debits of $6,300 for Anthony and $1,200 for Walker, respectively. The sum of the balances in subsidiary accounts receivable will equal the Accounts Receivable control account balance because the control account reflects the total amount owed by all customers. A debit balance in the control account and credit balances in the subsidiary accounts would be incorrect and would not keep the accounting equation in balance.

Alltech Company Maintains a Separate Accounts Receivable Account for Each