Question 63

The amount of prepaid rent credited to the buyer is $260.

Since the seller is responsible for the day of closing, the buyer will receive a credit for the days after the closing date. In this case, the prepaid rent covers 30 days, and the closing occurs on the 17th, meaning the seller is responsible for 17 days of rent.

A) $340

This option is incorrect because it suggests a higher amount than what would be calculated based on the prepaid rent for the 30 days. To reach $340, it would imply that more days were accounted for than are actually covered by the prepaid rent.

B) $320

Option B is also incorrect as it overestimates the credit. The calculation of $320 would imply that the buyer is being credited for too many days beyond what the prepaid rent actually covers, which does not align with the closing date responsibilities.

C) $280

This choice is incorrect as well. A credit of $280 indicates a miscalculation regarding the number of days the seller is responsible for. This amount does not accurately reflect the proper division of the prepaid rent based on the number of days counted.

D) $260

This option is correct because it accurately accounts for the number of days the seller must cover. With the closing on the 17th, the seller is responsible for 17 days of the prepaid rent, which translates to a credit of $260 for the buyer. This is derived from the calculation of $600 divided by 30 days, multiplied by 13 days of responsibility (30 - 17 = 13), resulting in a credit of $260.

Conclusion

The correct answer is $260, as it precisely reflects the calculation of the prepaid rent owed to the buyer after accounting for the seller's responsibility on the day of closing. All other options fail because they either miscalculate the number of days the seller is liable for or derive amounts that exceed the total prepaid rent available. Thus, $260 is the accurate credit amount aligning with the terms of the transaction.