Buyer Bill will receive a utilities bill for an estimated $300 at the end of the month. At closing, the seller has used an estim

Question

3 years ago

10

Buyer Bill will receive a utilities bill for an estimated $300 at the end of the month. At closing, the seller has used an estim

ated $100 of the bill. What should appear on the closing statement?
a) a debit to the seller and credit to the buyer for $200
b) a debit to the seller and credit to the buyer for $100
c) a debit to the buyer and credit to the seller for $200
d) a debit to the buyer and credit to the seller for $100

Business

1 answer:

liraira [26] · Answer 1 · 2022-02-20T06:05:09+03:00

Answer:

b) a debit to the seller and credit to the buyer for $100

Explanation:

The portion of the utilities bill consumed by the seller is not to be borne by buyer Bill, he cannot be made to pay for what he did not consume, the correct treatment is for seller to bear the $100 consumed by him by way of the following entries

Debit The seller $100

Credit Buyer bill $100

This is in the spirit of fairness to both Buyer Bill and Seller.