Math (Statement of Adjustments) Flashcards
Vincent and Pamela signed a standard contract of purchase and sale for the sale of Vincent’s property. Vincent agreed to give title free of encumbrances. Pamela is putting on a new mortgage. Costs are as follows:
Legal fees for conveyance $400.00
Legal fees to discharge an existing mortgage on title $100.00
Which one of the following statements is correct with respect to the statement of adjustments?
(1) For her share of the above fees, Pamela will have a debit of $500.
(2) Vincent should be credited $100.
(3) Pamela should be debited $400 and Vincent should be debited $100.
(4) Pamela should be debited $400 and credited $100.
3
Vanessa has agreed to sell her home to Paul for a price of $150,000. Paul has paid a deposit of $15,000 directly to his brokerage. There is a mortgage registered against title that has an outstanding balance of
$71,000, which Paul will assume. Paul will also be receiving financing, by way of a second mortgage, for
$34,000. Property taxes of $1,095 were not paid by Vanessa by the due date; therefore, a penalty of $105 has been assessed. The outstanding property taxes and penalty will be paid by the conveyancer from the sale proceeds. A real estate commission of 6% of the purchase price is payable. Conveyancing fees for this transaction are $600. The adjustment, completion and possession date is August 31st. It is NOT a leap year and property transfer tax is payable. What are the cash proceeds of sale to Vanessa?
(1) $69,169.00
(2) $69,538.00
(3) $69,204.38
(4) $140,169.00
1
buyer
debit credit
150000(sale)
15000(deposit)
71,000(mortgage)
34,000(second mortgage)
600(conveyance)
369(property tax)
1500(ppt 150,000X1%)
=152469 debit - 106,500credit = 45,969
to calculate the property tax..
aug 31-dec 31
dec + nov + oct + sept + aug
31 30 31 30 1
=123 days divided by 365 = .336 X 1095 = 369
- debit 369 to buyer
- credit 369 to seller
outstanding property taxes and penalty will be paid by the conveyancer for the sales proceeds, mean.. you have to debit the seller for the taxes they did not pay (1095 + 105 penalty)
seller
debit credit
150,000(sale)
71,000(outstand mort)
9000(commision)
1095 +105(tax and penalty)
369(property tax)
credit = 150,000 + 369 = 150,369.00
- debit (81,200)
=$69,169.00 !!
Violet has agreed to sell her home to Parker for a price of $150,000. Parker has paid a deposit of $15,000 directly to his brokerage. There is a mortgage registered against title that has an outstanding balance of
$71,000, which Parker will assume. Parker will also be receiving financing, by way of a second mortgage, for $34,000. Property taxes of $1,095 were not paid by Violet by the due date; therefore, a penalty of $105 has been assessed. The outstanding property taxes and penalty will be paid by the conveyancer from the sale proceeds. A real estate commission of 6% of the purchase price is payable. Conveyancing fees for this transaction are $600. The adjustment, completion and possession date is August 31st. It is NOT a leap year and property transfer tax is payable. What is the amount that Parker requires to complete this sale?
(1) $30,969.00
(2) $31,869.00
(3) $32,469.00
(4) $103,469.00
3
YOU MUST REMEMBER TO CALCULATE PROPERTY TRANSFER TAX!! ITS EASY TO FORGET.
150,000 X 1% (up to the first 200,000) = 1,500
buyer(parker)
debit credit
150,000(sale)
15,000 (deposit)
71,000(mortgage 1)
34,000(mortgage 2)
600(conveyance)
369(property tax aug 31-dec 31)
1500(property transfer tax DONT FORGET!!)
total amount owing = 32,469.00 !!!
seller
debit credit
150,000
71,000
1095 + 105
9000
369 (dont forget this one!!)
A property is sold for $175,000. Real estate commission is 5% on the first $100,000 and 2.5% on the balance of the sale price. The adjustment, possession and completion date is July 28th. Taxes for the current year, in the amount of $516, were paid by the seller on July 1st. The buyer has paid a $20,000 deposit to her brokerage. The legal fees for the conveyance amount to $384. No exemptions apply to this transaction, so property transfer tax is payable upon completion. It is NOT a leap year. The required balance due to complete from the buyer will be:
(1) $157,221.95.
(2) $157,739.95.
(3) $155,605.95.
(4) $157,355.95.
4
buyer
debit credit
175,000(sales)
20,000(deposit)
384(conveyance)
1750(property transfer tax)
221.95(property tax July 28-Dec 32 IMPORTANT
NOTICE THE RANGE IS FROM THE COMPLETION
DATE)
total = 157,355.95
buyer
debit credit
175,000
5000+ 1875(commision)
221.95 (property tax credit)
If the sale price was $120,000, the commission is 5%, the current year’s taxes have been paid and were
$1,095.00, and the adjustment date is August 30th, how much will the seller receive on completion?
(1) $114,723
(2) $114,369
(3) $126,726
(4) $114,372
4
31 + 30 + 31 + 31 + 2 = 124 / 365 = .33972 X 1095 = $372
seller
debit credit
120,000
6000 (commission)
372
=114,372
Given the following information, calculate the cash proceeds of sale to the seller on completion: Price: $195,000
Deposit paid to brokerage: $ 15,000
Financing: 1st mortgage of $71,000 to be assumed
2nd mortgage of $34,000 has been arranged by the buyer.
Taxes: The taxes in the amount of $1,500 are not due before the completion.
Commission: 6% of sale price
Conveyancing Fees: $600
Adjustment, Completion and Possession Dates: June 30th Note: It is not a leap year.
(1) $96,560.27
(2) $111,539.73
(3) $111,560.27
(4) $110,960.27
3
so the confusing part on this is..
“The taxes in the amount of $1,500 are not due before the completion.”
apparently this means that the seller will pay the buyer the amount that the buyer will pay to the city a few days later. so basically we still do the calculation.
seller
debit credit
195,000
71,000
11,700
739.73 ......(tax to pay to the buyer who will pay the city)
basically 6 months - 180/365 X 1500
this is the part that we didnt know!!!!!
11,700 (commision)
total = 195,000 - 71k - 11700-739.73-11700
= 111,560.27
Mr. Smith has contracted to sell his house to Mr. Jones for $200,000. Mr. Jones has paid a deposit of
$15,000, the balance in cash. Conveyancing fees are $350, taxes were prepaid by the seller, totalling $800 net for the period of July 1 to December 31, and the commission is 5%. Completion, adjustment and possession dates are July 1. Property transfer tax will be due on completion. The balance due to complete is:
(1) $187,753.29
(2) $187,850.00
(3) $188,950.00
(4) $188,150.00
4
“taxes were prepaid by the seller, totalling $800 net for the period of July 1 to December 31”
when it says “net” this means that an amount has already been subtracted, in other words, you DONT have to calculate anything!! just use the $800
buyer
debit credit
200,000
15,000 deposit
350 conveyance
2000 property transfer tax
800 property tax
total = 188,150
Victoria has agreed to sell her home to Penny for $140,000. Property taxes of $2,300 have been assessed and were paid in full by Victoria on July 15th. There is an outstanding late payment penalty of $85 which Victoria has not yet paid. The adjustment and possession date is December 28th. It is NOT a leap year. Penny’s share of the property taxes will appear on her own statement of adjustments as:
(1) a credit of $25.21.
(2) a credit of $18.90.
(3) a debit of $25.21.
(4) a debit of $18.90.
3
dec 31 - dec 28 = 3 plus 1 day / 365 = 1% = 25.21 to be debited to the buyer
Victor has agreed to sell his home to Pamela for $75,900. The completion and adjustment date is set at November 14th. The real estate commission payable by Victor is 7% of the selling price. Pamela has made a deposit of $2,000, which the real estate brokerage has passed to Pamela’s lawyer to be deposited in a trust account until the completion date. Victor has agreed to accept Pamela’s diamond ring as part payment equal to $7,500. Pamela is borrowing $65,000 from the Bank of Dad as a first mortgage loan. Victor paid the current year’s property taxes on the date they were due in the amount of $896. Pamela’s lawyer will charge
$600 to cover both legal and registration fees. Victor will be paying out a judgment registered against the title to his house in the amount of $6,225 and the legal fee to remove it will be $85. Victor is relying on Pamela’s lawyer to handle this transaction for him. As no exemptions apply to this transaction, property transfer tax will be payable upon completion. It is NOT a leap year. The balance due to complete required from Pamela is:
(1) $2,876.83.
(2) $56,894.83.
(3) $3,112.49.
(4) $2,117.83.
1
victor paid current year property tax 896
need to find buyers portion
november 14th-dec 31
30 -14 + 1 day (adjustment day)
= 17 days for november + 31 days for december
=48 days
48/365 = .13150 X 896 = 117.83
debit 117.83 to the buyer
credit 117.83 to the seller!!!!!!
buyer statement
debit credit
75900(sale)
2000(deposit)
7500(diamond ring)
65,000 (mortgage loan)
117.83 (tax)
600(legal fee)
759 (ppt 75900 X 1%)
balance = 2876.83
A seller agreed to sell her home for $155,000. The buyer paid a $5,000 deposit to his brokerage. The buyer will assume the existing mortgage on title, which has an outstanding balance of $71,000. Furthermore, the buyer will be granting a second mortgage to his father for $34,000. Taxes are unpaid and overdue in the amount of $1,095, with a further penalty owing of $105. Real estate commission is 6% of the sale price. Legal fees for the transaction are $600. The adjustment, completion and possession date is August 31st. It is NOT a leap year and property transfer tax is payable in this transaction. What are the cash proceeds due to the seller?
(1) $69,169.00
(2) $69,538.00
(3) $73,869.00
(4) $74,169.00
3
seller
debit credit
155,000
1095 + 105
9300
71000
369 (153/365 X 1095)
total = 73,869.00 proceeds to the seller
Garth has agreed to buy Whiteacre from Elisa for $448,000. Property taxes are not yet due. The taxes last year were $1,324 and the notary public has told Garth to expect a 10% increase in that amount for the current year. The completion and adjustment dates are February 18th. It is NOT a leap year. The property tax amount to be paid by Elisa will appear on her statement of adjustments as a:
(1) debit in the amount of $174.12
(2) credit in the amount of $1,264.87
(3) credit in the amount of $191.52
(4) debit in the amount of $191.53
4 ok, we figured out the difference, remember, the one day it should have been 47/365 this will = $191.53 possibly
48/365 (48th day of the year divided by 365)
= .13
X 1324 X 1.10 increase
= 191.52!!
not sure but this could be how its done
Karl has agreed to buy Whiteacre from Anya for $448,000. He has deposited $25,000 with the notary public who will complete the conveyance. The brokerage’s commission is 5% on the first $100,000 and 1.5% on the balance of the purchase price. Property taxes are not yet due. The taxes last year were $1,324 and the notary public has told Karl to expect a 10% increase in that amount for the current year. The completion and adjustment dates are February 18th. There are two mortgages on Anya’s title. Karl is assuming Anya’s first mortgage in the amount of $123,544. Karl has arranged a second mortgage through the Banque Nationale de Paris, in the amount of $98,000. The balance of the purchase price and the property transfer tax will be paid in cash out of proceeds from the sale of Karl’s other property. Anya will pay out her existing second mortgage of $23,000 from the proceeds of this transaction. The notary’s fees are $700 for the conveyance, $250 for preparation of Karl’s new mortgage and $75 for discharging Anya’s second mortgage. It is NOT a leap year. The cash proceeds of sale which will be received by the Anya on the completion date is:
(1) $265,969.47.
(2) $290,969.47.
(3) $289,469.47.
(4) $292,469.47.
2
seller
debit credit
448,000
5000+5220 (commision)
191.47 (taxes jan 1-feb 18 to be paid to buyer)
123,544 (outstanding mortgage)
23,000(existing mortgage)
75(discharge mortgage fee)
total = 290,969.47
buyer
debit credit
488,000
25,000
191.47 tax
2000 + 4960 transfer tax
123,544
98,000
700
250
Kenny has agreed to buy Pinkacre from Alia for $448,000. He has deposited $25,000 with the notary public who will complete the conveyance. The brokerage’s commission is 5% on the first $100,000 and 1.5% on the balance of the purchase price. Property taxes are not yet due. The taxes last year were $1,324 and the notary public has told Kenny to expect a 10% increase in that amount for the current year. The completion and adjustment dates are February 18th. There are two mortgages on Alia’s title. Kenny is assuming Alia’s first mortgage in the amount of $123,544. Kenny has arranged a second mortgage through the Big Bank Inc., in the amount of $98,000. The balance of the purchase price and the property transfer tax will be paid in cash out of proceeds from the sale of Kenny’s other property. Alia will pay out her existing second mortgage of $23,000 from the proceeds of this transaction. The notary’s fees are $700 for the conveyance,
$250 for preparation of Kenny’s new mortgage and $75 for discharging Alia’s second mortgage. It is NOT a leap year. The balance due to complete on Kenny’s statement of adjustments is:
(1) $210,630.87.
(2) $202,214.47.
(3) $209,174.47.
(4) $208,982.94.
3
buyer
debit credit
488,000
25,000
191.47 tax
2000 + 4960 transfer tax
123,544
98,000
700
250
Blackacre, a revenue producing property, has been sold. The date of adjustment will be January 31, 1991, exactly 18 months after the contract of purchase and sale was signed and a deposit of $3,500 was paid directly to the seller. If interest on this deposit accrues for the benefit of the buyer, 6% per annum, compounded annually, what will be the amount shown on the seller’s statement of adjustment?
(1) $3,815.00 debit
(2) $3,819.68 debit
(3) $3,815.00 credit
(4) $3,819.68 credit
2
j1=6%
n=18
3500 0 ?
=3,819.60 debit to seller
