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property taxes are $4,200 per year. The closing is April 20th and closing day is charged to the buyer. Using the 365-day method, how will the proration of property taxes show on on the closing statement?

Sagot :

abiolataiwo2015

Answer:

Dr Seller $1,254.25

Cr Buyer $1,254.25

Explanation:

Calculation for how will the proration of property taxes show on the closing statement

First step is to calculate days of seller ownership

Days of seller ownership= 31 days in January 31 + 28 days in February+31 days in March + 19 days in April

Days of seller ownership=109 days

Second step is to calculate the tax owed by the seller using this formula

Tax owed by the seller =[(Property taxes ÷365 days)*Days of seller ownership]

Let plug in the formula

Tax owed by the seller=[($4,200 per year÷365 days)*109 days

Tax owed by the seller=$1,254.25

Last step is how will the proration of property taxes show on on the closing statement

Closing statement Entries will be show as:

Dr Seller $1,254.25

Cr Buyer $1,254.25

Therefore how will the proration of property taxes show on the closing statement is Debit Seller $1,254.25 and Credit Buyer $1,254.25

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