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Chapter 8: Q5RQ (page 465)

What type of account must the sum of all subsidiary accounts be equal to?

Short Answer

Expert verified

There must be a match between each subsidiary receivable and the overall balance in the control account, Accounts Receivable.

Step by step solution

01

Meaning of Subsidiary Account

Linked accounts are gathered into a single ledger via a subsidiary account, allowing for easy addition and analysis. It is considerably easier to review data that has been organized and grouped. Pay attention to the ledger of obligations.

02

Type of account that the sum of all subsidiary accounts must be equal to.

The accounts receivable account should match the amount of all subsidiary credit client accounts. Because the accounts receivable account serves as the control account for all of the separate subsidiary accounts kept for each credit customer, the balance of all subsidiary accounts must match the amount of the accounts receivable.

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Most popular questions from this chapter

Question: On June 6, Lakeland Bank & Trust lent $80,000 to Stephan Stow on a 30-day, 9% note.

Requirements

1. Journalize for Lakeland the lending of the money on June 6.

2. Journalize the collection of the principal and interest at maturity. Specify the date Round to the nearest dollar

Applying the allowance method (aging-of-receivables) to account for Uncollectibles Surf and Sun had the following balances at December 31, 2018, before the year-end adjustments:

Accounts Receivable

81,000

Allowance for Bad Debts

Bal. \( 2,063

The aging of accounts receivable yields the following data:

Age of Accounts Receivable

0鈥�60 Days

Over 60 Days

Total Receivables

Accounts Receivable

\) 78,000

\( 3,000

\) 81,000

Estimated percent uncollectible

*2%

* 23%

Requirements

1. Journalize Surf and Sun鈥檚 entry to record bad debts expense for 2018 using the aging-of-receivables method.

2. Prepare a T-account to compute the ending balance of Allowance for Bad Debts.

In accounting for bad debts, how do the income statement approach and the balance sheet approach differ?

Recording credit sales and collections

Record the following transactions for Summer Consulting. Explanations are not required.

Apr. 15

Provided consulting services to Bob Jones and billed the customer \(1,500.

18

Provided consulting services to Samantha Cruise and billed the customer \)865.

25

Received \(750 cash from Jones.

28

Provided consulting services to Regan Taylor and billed the customer \)625.

28

Received \(865 cash from Cruise.

30

Received \)1,375 cash, \(750 from Jones and \)625 from Taylor

How is the acid-test ratio calculated, and what does it signify?

See all solutions

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