A property on a lake is closing on August 1st. A boat dockage fee due to the homeowners association, for $240 for a six-month period, from July 1 to December 31 is due September 1, and will be paid by the buyer. What entry appears on the closing statement?
A. Debit to the buyer $40
B. Credit to the buyer $240
C. Credit to the seller $40
D. Credit to the buyer $40
I chose C because the seller already paid for one month. The problem states that the buyer will be paying the fee so my thought process was that the seller would be credited what he paid back. The right answer is D. Is this consistent? Unless stated otherwise would the buyer just be credited what the seller paid or is the type of fee important to what happened on the closing statements.
Sorry, these questions get really confusing