Final answer:
The question involves a real estate transaction with taxes to be prorated at closing. The correct entry on the Closing Disclosure would be a debit to the seller for $136.37 and a credit to the buyer for $595.63.
Step-by-step explanation:
A student's question pertains to a real estate transaction scheduled to close on March 10, with taxes for the year estimated at $732. To determine how these taxes will be displayed on the Closing Disclosure, we must prorate the tax amount based on the closing date. Assuming that taxes are paid yearly and the closing is on the 69th day of the year (March 10), the seller is responsible for the period from January 1 to March 9, and the buyer is responsible from March 10 to December 31. The seller's portion is calculated as (68/365) × $732, which equals $136.37. The buyer's portion is the remainder of the year's taxes; hence, ($732 - $136.37) equals $595.63. This would be shown on the Closing Disclosure as debit seller $136.37, credit buyer $595.63.