Question
11. Kent Company, a realty entity, maintains escrow accounts and pays real estate taxes for the mortgage customers. Escrow funds are kept in interest-bearing accounts.
11. Kent Company, a realty entity, maintains escrow accounts and pays real estate taxes for the mortgage customers. Escrow funds are kept in interest-bearing accounts. Interest, less a 10% service fee, is credited to the mortgagee's account and used to reduce future escrow payments. The entity provided the following additional information for 2015:
Escrow accounts liability, January 1 700,000
Escrow payments received 1,580,000
Real estate taxes paid 1,720,000
Interest on escrow funds 50,000
What amount should be reported as escrow accounts liability on December 31, 2015?
A. 510,000
B. 515,000
C. 605,000
D. 610,000
12. On the first day of each month, Bell Company receives from Kaye Company an escrow deposit of P250,000 for real estate taxes. The entity records the P250,000 in an escrow account. Kaye's 2015 real estate tax is P2,800,000, payable in equal installments on the first day of each calendar quarter. On January 1, 2015, the balance in the escrow account was P300,000.
On September 30, 2015, what amount should be reported as an escrow liability?
A 1,150,000
B. 450,000
C. 850,000
D. 150,000
13.On July 1, 2015, the city government issued realty tax assessments for the fiscal year ended June 30, 2016. On September 1, 2015, Gina Company purchased a warehouse within the city. The purchase price was reduced by a credit for accrued realty taxes. The entity did not record the entire year's real state tax obligation, but instead records tax expenses at the end of each month by adjusting prepaid real estate taxes or real estate taxes payable, as appropriate. On November 1, 2015, the entity paid the first of two equal installments of P12,000 for realty taxes.
What amount of the payment should be recorded as a debit to real estate taxes payable?
A.4,000
B.8,000
C.10,000
D.12,000
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