A Business Maintains Subsidiary Accounts for Each of Its Customers

question 5

Multiple Choice

A business maintains subsidiary accounts for each of its customers.On May 15,the business provides services on account: $2400 to customer J.Anthony ; $4300 to customer A.Martin; and $1800 to customer S.Lee.Which journal entry is needed to record these transactions?

• A) \[\begin{array} { | l | l | r | r | }
• \hline \text { May 15 } & \text { Accounts Receivable } & 8500 & \\
• \hline & \text { Service Revenue } & & 8500 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | r | r | }
• \hline \text { May 15 } & \text { Accounts Receivable - J. Anthony } & 2400 & \\
• \hline & \text { Accounts Receivable - A. Martin } & 4300 & \\
• \hline & \text { Accounts Receivable - S. Lee } & 1800 & \\
• \hline & \text { Service Revenue } & & 8500 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | r | r | }
• \hline \text { May } 15 & \text { Service Revenue } & 8500 & \\
• \hline & \text { Accounts Receivable } & & 8500 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | r | l | r | r | }
• \hline \text { May 15 } & \text { Accounts Receivable Control } & 8500 & \\
• \hline & \text { Sales Revenue } & & 8500 \\
• \hline & & & \\
• \hline \text { May 15 } & \text { Accounts Receivable - J. Anthony } & 2400 & \\
• \hline & \text { Accounts Receivable - A. Martin } & 4300 & \\
• \hline & \text { Accounts Receivable -S. Lee } & 1800 & \\
• \hline & \text { Accounts Receivable - Control } & & 8500 \\
• \hline
• \end{array}\]

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Definitions:

Net Income

The total profit of a company after all expenses, including taxes and operating expenses, have been deducted from total revenue.

Preferred Dividends

Dividends that are paid out to preferred shareholders before any dividends are distributed to common shareholders, often at a fixed rate.

Market Price

The current price at which an asset or service can be bought or sold in a particular marketplace.

Discontinued Operation

A business segment that has been sold, abandoned, or otherwise discontinued, and is reported separately in financial statements.