Final answer:
In the sale of rental properties, staff wages are prorated by calculating the amount of wages earned up until the sale date. Proration ensures fair compensation for employees during the ownership transition period. This involves obtaining a daily wage rate and multiplying it by the number of days worked before the sale.
Step-by-step explanation:
When selling rental properties, staff wages may need to be prorated if the sale occurs in the middle of a pay period. Prorating wages involves calculating the amount of wages earned up until the sale date. For example, if an employee is paid monthly and the property sells halfway through the month, then the wages would be prorated to reflect payment for only half of the month. The portion of the wages for the time the staff worked for the previous owner is typically paid out by the seller, whereas the new owner would be responsible for the wages earned after the sale.
Prorating staff wages ensures that employees are fairly compensated for their work, regardless of the property's change in ownership. This process requires a clear understanding of the number of days worked and the daily wage rate. A common formula for prorating staff wages is to take the employee's monthly salary, divide it by the number of working days in that month to obtain a daily rate, and then multiply this rate by the number of days worked up until the sale.