Answer:
Credit the buyer $1,776 and debit the seller $1,776.
Step-by-step explanation:
In accounting books the buyer will be credit from $1,776 and seller will be debit from $1,776.
Answer:
1) Credit the buyer $1,776 and debit the seller $1,776.
Step-by-step explanation:
For this, we are to simply understand and follow the calculation of proration. Proration is the allocation or dividing of certain money items at the closing.
The buyer pays:
Total taxes = $ 9540
Total Time Span before closing took place = 2 months and 7 days
Per month charge = [tex]\frac{9540}{12}[/tex] = $795 per month
Charges per day = [tex]\frac{795}{30}[/tex] =$ 26.5 per day
2 months charge = 795 x 2 = $1590
Charges for 7 days = 7 x 26.5 = $185.5
Total Charges = 1590 + 185.5 = $ 1775.5 ≈ $1776 (Rounding off)
As the property's taxes were paid for by the buyer and the seller was responsible for the day of closing, and buyer paid for the arrears too of the previous 2 months and 7 days, the buyer gets a credit and seller gets a debit. The seller owes the buyer $1776.
Hence,
The buyer gets a credit of $1,776 and Seller gets a debit of $1,776
