Legal 3170 Proration Questions for Settlement Closing Statement Preparation Indi

Question

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 Bob sold his house on July 15. His yearly taxes for the year are $950, and the water is $150 a year. Bob prepaid the taxes and the water on January 1t. 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. Taxes in Utah are due November 30th. The annual taxes are $1540 and are paid in arrears. Closing takes place on May 1st. What is the entry for the buyer and seller? 3. In Questions 3 from above, what would be the entry for buyer and seller if the taxes were paid in advance? 4.

Explanation / Answer

1) Total prepaid taxes and water on 1st Jan 950+150=1100

Date of sold July 15 th.

No of days from 1st Jan to 15 th July is 196 days

Balance days in year 365-196= 169days.

Balance in prepaid account is 1100×169/365= $509

It is received from buyer by seller.so entry for receipt in books of seller is

Cash or bank account (debit)

Taxes in Advance (credit)

2).

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