Question

Taxes on the property Buyer Alan is purchasing are $3,200 due on December 31. If the closing is set for October 15, using the 365-day method, how much of the taxes will be credited to the buyer? (Assume it is not a leap year and the day of closing belongs to the seller.)

a) The seller's share of $2,533.38
b) The buyer's share of $666.62
c) The seller's share of $2,525.76
d) The buyer's share of $674.24

Answer 1

c) The seller's share of $2,525.76

Step-by-step explanation:

The computation is shown below:

= Due amount × given number of days ÷ total number of days in a year

where,

Due amount is $3,200

Given number of days is calculated from Jan 1 to October 15 i.e

= 31 days in January + 28 days in February + 31 days in March + 30 days in April + 31 days in May + 30 days in June + 31 days in July + 31 days in August + 30 days in September + 15 days in October

= 288 days

So, the amount is

= $3,200 × 288 days ÷ 365 days

= 2,524.93

i.e 2,525.76