Question
I have seen this answered all over this site and I think the person answering it is always trying to make the answer fit an
I have seen this answered all over this site and I think the person answering it is always trying to make the answer fit an incorrect key rather than the logic of credits and debits. Can someone verify my thoughts here? Here is the question and allow me to explain why I think the key is wrong and what has caused a lot of copy and pasting of an incorrect method online. The question reads:
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On February 1, a seller paid $1,140 in annual property tax for the current calendar year. He sold the house with the closing set for April 1. What will be the seller's credit for the property taxes already paid if the buyer pays for the day of closing? Use a 360-day year and a 30-day month. Select one:
a. $285 b. $852 c. $288 d. $380
What is the sellers credit?
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Now my logic knowing real estate taxes are PREPAID so the seller paid $1140 upfront in February, lived there for 90 days and wants CREDITED that amount back to them on the closing date of April 1st. It says the buyer will pay the closing date so my math says
1140/360= 3.166 per day x 90 days = $285
The SELLER originally paid $1,140, used $285 and wants the difference back
so 1140-285 = $855... Now, none of the textbooks with this question give an $855 option and I wonder why? I wonder if the key was wrong and people just calculated this to fit the answer and said $288 was credited to the seller (because again this was an option and it was so confusing no one questioned it?) Whats weird with the logic of $288 being correct though is WHY would the seller get a credit of a SMALL AMOUNT when they had paid a LARGE AMOUNT and only lived their a short time period (they would have only lived their 90 days and paid a whopping $1140 for the full year!
Can someone please explain where I'm missing the logic here? It seems like the breakdown happens with the idea of credits and debits and who gets what... But it seems to me there's a lot of typos in the resources that have allowed this question to be answered continuously wrong (to fit a key that might be wrong) So PLEASE before writing, think about the concept of credits and debits to logically apply this to the seller. :) Thanks!!!
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