MacBook Air Legal 3170 Proration Questions for Settlement Closing Statement Prep

Question

MacBook Air Legal 3170 Proration Questions for Settlement Closing Statement Preparation Indicate where the following entries would be located on the Hud-1 Settlement statement. Also indicate whether they would be a debit or a credit and to who. 1. Purchase price 2. New First Mortgage 3. Taxes Arrears 4. Taxes in Advance 5. Commission 6. Recording of Deed 7. Preparation of Deed 8. Earnest Money deposit 9. Second Mortgage Pay-off 10. Second Mortgage-purchase money mortgage 11. Title insurance 12. Closing cost for buyer and seller 13. Personal property that buyer purchased from seller His yearly taxes for the year are $950, and the water is $150 a Bob sold his house on July 15. year. Bob prepaid the taxes and the water on January 1st. At closing what does the buyer pay the seller? Also, who is debited and who is credited and how much? 1. In the question above the taxes and the water are paid in arrears. At closing who is debited and who is credited and how much? 2.

Explanation / Answer

1. In the given problem Bob sold his house on july 15. his yearly taxes for the year are $950 and the water tax is $150 prepaid on January 1st. So at the time of buy the property the buyer has to pay to the seller of the amount pertaining to the period he used the property i.e from August 15 to December 15 of 5 Months.

Taxes to be paid by buyer to seller is $1100*5/12 Months = $458.

Debit the Buyer and Credit the Seller becase amount already paid by seller. it would be located on purchase price.

2. in case of pay the taxes in arrears it would be paid by buyer fully and reduced while repay to the seller of taxes amounts. The entry will be as follows, Debit the seller of $641 and Credit the Buyer of $641. It will be located at Taxes in Arrears.

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