Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

12th edition

134725980, 9780134726656 , 978-0134725987

More Books

Students also viewed these Accounting questions

Question

3. An initial value (anchoring).

Answered: 1 week ago

Question

4. Similarity (representativeness).

Answered: 1 week ago