Chapter 14 Flashcards
Real Estate - Related Computations and Closing of Transactions
1
Q
A property has annual taxes of $450. The date of closing of October 12th is charged to the seller. Using the 365-day proration method, what is the amount of the tax proration, and how should it be entered on the closing statement? A. $98.63 credit seller, debit buyer B. $98.63 credit buyer, debit seller C. $351.37 credit seller, debit buyer D. $351.37 credit buyer, debit seller
A
B. $98.63 credit buyer, debit seller
2
Q
A property sold for $90,000 and has an 85% mortgage. What is the total amount of the state documentary stamp tax on the note and intangible tax on the mortgage? A. $153.00 B. $261.75 C. $267.75 D. $420.75
A
B. $261.75
3
Q
A tenant paid rent of $450 on the first of the month when due. The property sold on March 12th and the day of closing belonged to the seller. What is the amount of the rent proration, and how should it be entered on the closing statement? A. $174.19, debit seller, credit buyer B. $174.19, debit buyer, credit seller C. $275.81, debit seller, credit buyer D. $275.81, debit buyer, credit seller
A
C. $275.81, debit seller, credit buyer
4
Q
Which of the following describes expenses on a closing statement? A. prorated between parties B. always entered as double entries C. always entered as debit entries D. entered as disbursements
A
C. always entered as debit entries
5
Q
Which is the purpose of the closing statement?
A. to verify the terms of the contract
B. to provide a source of income for closing agents
C. to summarize and simplify the transaction
D. to inform each party the closing costs to be charges to the other
A
D. to inform each party the closing costs to be charges to the other
6
Q
Who or what determines the rates for documentary stamps? A. current interest rates B. state law C. mortgage bankers D. the closing agent
A
D. the closing agent
7
Q
Who determines the form for the closing statements?
A. Florida Real Estate Commission
B. department of business and professional regulation
C. the broker
D. the closing agent
A
C. the broker
8
Q
When a seller takes back a second mortgage, how is it entered on a closing statement? A. credit to the seller B. debit to the seller C. debit to the buyer D. credit to the buyer
A
B. debit to the seller
9
Q
Which party normally pays for documentary stamps on the deed? A. the seller B. the buyer C. the closing agent D. the listing broker
A
A. the seller
10
Q
Taxes for the year were $12,800. Closing is March 17th, and the seller has agreed to be responsible for all charges on the day of closing. Using the 365-day method, how would this proration appear on the closing statement?
A. debit seller $2665.21, credit buyer $10,134.79
B. debit buyer $10,134.79, credit seller $2665.21
C. debit seller $2665.21, credit buyer $2665.21
D. debit buyer $2665.21, credit seller $2665.21
A
C. debit seller $2665.21, credit buyer $2665.21
11
Q
Which characteristic applies to the note documentary stamp tax? A. paid by the seller B. $.70 per $100 C. .002 of the loan amount D. $.35 per $100
A
D. $.35 per $100
12
Q
How would an escrow deposit typically appear on a closing statement? A. credit to seller B. debit to seller C. credit to buyer D. debit to buyer
A
C. credit to buyer
13
Q
How would a purchase money mortgage appear on a closing statement?
A. credit the buyer and debit the seller
B. credit the seller and debit the buyer
C. debit the seller and debit the buyer
D. credit the seller and credit the buyer
A
A. credit the buyer and debit the seller
14
Q
162. A real estate closing for a duplex is scheduled for September 7, with the day of closing charged to the buyer. Monthly rent is $1,300 per unit. Which closing statement entry is correct? A. debit the buyer $520.00 B. credit the buyer $520.00 C. debit the buyer $2,080.00 D. credit the buyer $2,080.00
A
D. credit the buyer $2,080.00
15
Q
Closing date is June 8 with the day of closing belonging to the buyer. Annual real estate taxes are $2,730. Using the 365-day method, what prorated amount of taxes will be debited to the seller? A. $957.37 B. $1,181.75 C. $1,548.25 D. $1,772.63
A
B. $1,181.75
16
Q
In November, the seller paid $1,375 for the annual property taxes. The closing date is December 14, and the day of closing belongs to the seller. Using the 365-day method, what prorated amount of taxes will be debited to the seller? A. $1,310.96 B. $1,194.18 C. $180.82 D. $64.04
A
D. $64.04
17
Q
166. Calculate the total state taxes due in the following transaction: The sales price is $249,480. The buyer will assume the seller's first mortgage of $190,000. The seller has agreed to take back a new purchase money second mortgage for $25,000. A. $1,796,50 B. $2,176.50 C. $2,461.50 D. $2,549.00
A
D. $2,549.00
18
Q
- Which entity establishes the rates for the documentary stamps?
A. DBPR
B. FREC
C. the county where the property is located
D. State of Florida
A
D. State of Florida
19
Q
If the documentary stamp tax on the deed was $520.10, and the note tax on the purchase money mortgage was $227.50, how much was the sales price and the purchase money mortgage? A. $150,000 and $55,000 B. $148,600 and $32,500 C. $74,300 and $65,000 D. $32,500 and $15,000
A
C. $74,300 and $65,000
20
Q
A house is purchased for $175,000. The buyer will assume the existing first mortgage with a balance of $110,512, and the seller will take back a purchase money second mortgage for $21,500. Calculate the total state documentary stamp taxes that will be charged in this transaction. A. $1,730.04 B. $1,730.35 C. $1,951.06 D. $1,951.37
A
B. $1,730.35
21
Q
How is an existing mortgage that is being retired at closing shown on a closing statement? A. debit to seller B. debit to buyer C. credit to seller D. prorated between the buyer and seller
A
A. debit to seller
22
Q
The binder deposit shows on the seller’s closing statement only under which condition?
A. it is paid in cash
B. the deposit exceeds the commission
C. it is paid directly to the seller by the buyer
D. the closing will be handled by a title company
A
C. it is paid directly to the seller by the buyer
23
Q
How are property taxes accounted for on a closing statement? A. debited entirely to the buyer B. prepaid entirely by the buyer C. prorated between the buyer and seller D. debited entirely to the seller
A
C. prorated between the buyer and seller
24
Q
What would you expect to see on a broker’s reconciliation section of the closing statement?
A. disbursements equal the receipts, minus the brokerage fee
B. broker’s fee is prepaid by the buyer
C. disbursements equal receipts plus brokerage
D. disbursements equal receipts
A
D. disbursements equal receipts
25
Which of the following is an entry on a broker's cash reconciliation statement?
A. expenses of the buyer are shown as a disbursement
B. expenses of the seller shown as a receipt
C. expenses of the buyer shown as a receipt
D. expenses of the broker shown as a disbursement
A. expenses of the buyer are shown as a disbursement
26
Which of the following items would typically appear as debits to the seller on the closing statement?
A. first mortgage interest, purchase price, and expenses
B. assumed mortgage interest, taxes, and expenses
C. expenses, deposit, and purchase price
D. taxes, mortgage interest, and purchase price
B. assumed mortgage interest, taxes, and expenses
27
An individual is buying an eight-unit apartment complex that closes on June 10 (closing day to the seller). If rent is $235.00 per month per unit in advance, how will the rent proration appear on the closing statement?
A. debit seller $626.67, credit buyer $626.67
B. credit seller $1253.33, debit buyer $1253.33
C. debit seller $1253.33, credit buyer $1253.33
D. debit seller $1253.33, credit buyer $626.67
C. debit seller $1253.33, credit buyer $1253.33
28
The buyer has agreed to assume the existing mortgage of $74,260.00 at 8 1/2% interest, with monthly payments of $622.60. The remaining term of the loan is 22 years, and the closing date is May 18 (prorate as of midnight the day prior to closing). Prorate the interest using the calendar year. How will the interest portion of the payment be prorated on the closing statement?
A. debit the seller $288.46, credit the buyer $288.46
B. debit seller $288.46, credit buyer $237.56
C. debit seller $341.43, credit buyer $341.43
D. debit buyer $293.99, credit seller $293.99
A. debit the seller $288.46, credit the buyer $288.46
29
Mr. Smith agreed to sell his house to Mrs. Brown. The closing date was set for October 15. Smith agreed to pay for all charges incurred on the day of closing. The estimated taxes for the year are $4,800. Using the 365-day method, how would the taxes appear on the closing statement?
A. debit buyer $3,787.40, credit seller $3,787.40
B. debit seller $3,787.40, credit buyer $3,787.40
C. debit seller $1,012.60, credit buyer $1,012.60
D. debit buyer $1,012.60, credit seller $1,012.60
B. debit seller $3,787.40, credit buyer $3,787.40
30
```
475. Closing date is June 5, and the day of closing belongs to the buyer. Annual real estate taxes are $730. Using the 365-day method, prorate the amount of taxes debited to the seller.
A. $420
B. $418
C. $312
D. $310
```
D. $310
31
```
Closing date is January 10, and the day of closing belongs to the seller. The buyer has arranged for a $200,000 mortgage at an interest rate of 8%. The prepaid interest due at closing is $956. Which of the following would be a correct entry on the closing statement?
A. debit buyer $956, credit seller $956
B. credit buyer $956, debit seller $956
C. debit buyer $956
D. credit seller $956
```
C. debit buyer $956
32
What is a closing statement?
A. seller's statement of settlement costs
B. buyer's statement of settlement costs
C. statement of settlement costs between the buyer and seller
D. statement recorded in the public records evidencing title transfer
C. statement of settlement costs between the buyer and seller
33
```
A property measures 660 feet by 990 feet and sold for $12,000 per acre. The buyer can obtain 80% financing. How much is the intangible tax?
A. $460.80
B. $360.00
C. $288.00
D. $270.00
```
C. $288.00
34
```
How would the purchase price be correctly entered on a closing statement?
A. debit seller, credit buyer
B. debit seller, disbursement to broker
C. debit buyer, credit seller
D. debit buyer, disbursement to broker
```
C. debit buyer, credit seller
35
```
All of the following items are typical prorations on a closing statement, EXCEPT:
A. real property taxes
B. interest on assumed loan
C. rent collected
D. state documentary stamp taxes
```
D. state documentary stamp taxes
36
How would intangible taxes typically appear on a closing statement?
A. double-entry debit to the buyer and a credit to the seller
B. double-entry credit to the buyer and a debit to the seller
C. single-entry debit to the buyer
D. single-entry debit to the seller
C. single-entry debit to the buyer
37
```
How would a second mortgage, that does not involve the seller, be reflected on a closing statement?
A. credit to the buyer
B. debit to the seller
C. credit to the seller
D. debit to the buyer
```
A. credit to the buyer
38
Which item would you expect to see on the broker's closing statement?
A. broker's fee shown as a receipt
B. seller's expenses shown as a disbursement
C. buyer's expenses shown as a receipt
D. amount due the seller at closing shown as a receipt
B. seller's expenses shown as a disbursement
39
```
How would a new mortgage appear on the closing statement?
A. credit to the buyer
B. debit to the buyer
C. credit to the seller
D. debit to the seller
```
A. credit to the buyer
40
On a closing statement, how would a purchase money second mortgage obtained from the seller be entered?
A. credit to seller, debit to buyer
B. credit to buyer, debit to seller
C. debit to seller, receipt for broker
D. credit to seller, disbursement by broker
B. credit to buyer, debit to seller
