(For the National Exam)
An apartment building has 10 apartments rented at a monthly rate of $780. The property closed on August 18, with the seller having the day of closing. Using a 365 day year what will be the seller debit statement
A. $3,000 B. $3,271 C. $3,465 D. $4,800
How I got my answer: $780 x 10 = $7,800 $7,800/31 = $251.6129 per day. $251.6129 x 18 days = $4,529.03
The right answer: $780 x 10 = $7,800 $7,800/31 = $251.6129 per day. $251.6129 x 13 days = $3,271 (B)
I’m confused because if the seller is getting debited isn’t he paying for the days prior to closing? Wouldn’t you multiply the daily rate by 18 days because he would be paying those days, and the buyer would be paying the 13 days? Can someone please shed some light? I thought I had proration a down but this caught me off guard.
My understanding is debit means paying, and credit means recovering. Are debit and credits reversed maybe? Do they change? I know they did in my accounting class but if they do here too, how would I know?