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20 October, 05:42

The annual property taxes of $1,700 were paid in arrears by the buyer. If the closing took place on June 4th and the seller paid through the day of closing, how did this appear on the settlement sheet if the 360-day method is used?

A. $727 DS, CB

B. $727 DB, CS

C. $973 DS, CB

D. $973 DB, CS

+5
Answers (1)
  1. 20 October, 05:56
    0
    A. $727 DS, CB

    Explanation:

    Step 1: Calculate the Monthly rate=

    $1,700 : 12 = $141.67

    Step 2: Calculate the Daily rate = Monthly rate : 12

    = $141.67 : 30 = $4.72

    Since the closing took place on June 4th, it means the seller owes 5 months (January - May) and 4 days (1st-4th of June)

    Hence, the seller owes the following based on steps 1 and 2

    5 Months = $141.67 x 5 = $708.35

    4 day = $4.72 x 4 = $18.88

    Total Amount = $708.35 + $18.88 = $727.23 Approximately $727.

    The treatement therefore is to Debit the Seller (DS) and Credit the Buyer (CB) with $727
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Home » Business » The annual property taxes of $1,700 were paid in arrears by the buyer. If the closing took place on June 4th and the seller paid through the day of closing, how did this appear on the settlement sheet if the 360-day method is used? A. $727 DS, CB B.
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