The home was sold on July 18. The next payment date is August 1. The buyer agreed to assume the seller's 6% loan which has a balance of $36,800 as of July 1. Interest on this loan would be prorated as
A) debit buyer $77.16 and credit seller $106.84.
B) debit seller $77.16 and credit buyer $106.84.
C) credit seller $106.84 and charge buyer $106.84.
D) credit buyer $106.84 and charge seller $106.84.

Question

Quizplus · Accepted Answer

Interest is paid in arrears so the seller owes the buyer. The daily rate calculation is: 36,800 × .06 / 12 / 31 = 5.9355 times number of days (18)= 106.84.

The Home Was Sold on July 18