What is the exam-ready answer?
| Official syllabus topic | XI.A Calculations for Transactions: seller net, buyer funds, prorations, and transfer fees |
|---|---|
| Official PSI area | Real Estate Calculations |
| Published weight | 7% of the 100-question national portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
The Rule
PSI publishes a weight for the complete official area, not a guaranteed count for this individual calculation. Follow the stated facts, units, time basis, and rounding instruction.
Formula and variables
| Symbol or term | Meaning |
|---|---|
| Debit | An amount that increases what a party owes or reduces that party's proceeds |
| Credit | An amount that reduces what a party owes or increases that party's proceeds |
| Payment timing | Whether the item was paid in advance or remains unpaid in arrears |
Step-by-step method
- Identify the party, item, ownership period, and whether it is paid in advance or arrears.
- Ask who currently has the money or who will receive the future bill.
- Charge the party who owes the adjustment with a debit.
- Give the other party an equal credit.
- Place buyer acquisition funds, loan proceeds, deposits, and seller payoff or costs in their correct columns without forcing them into proration logic.
Georgia-specific distinction
Worked examples
Example 1: Unpaid taxes in arrears
Scenario. The seller's $1,500 share of current-year property taxes is unpaid, and the buyer will later receive the bill.
- Seller used the property during the allocated period.
- Buyer will face the bill after closing.
- Debit seller $1,500 and credit buyer $1,500.
Answer. Seller debit $1,500; buyer credit $1,500.
Reasonableness check. The entries balance and put money with the person who will pay the future bill.
Example 2: Rent collected in advance
Scenario. The seller collected $900 rent for days after closing that belong to the buyer.
- Seller currently holds money earned during the buyer's ownership period.
- Debit seller $900 and credit buyer $900.
Answer. Seller debit $900; buyer credit $900.
Reasonableness check. The buyer receives the income belonging to the buyer's period without collecting it twice from the tenant.
Common exam traps
- Memorizing that taxes always produce one direction without checking payment status
- Giving both parties a debit or both parties a credit for one proration
- Treating a buyer deposit as a new cash debit
- Assuming local custom overrides the allocation stated in the question
Original practice questions with detailed explanations
These original instructional questions map to the July 1, 2026 PSI outline. They are not copied from PSI or any live examination. Write the setup before opening the explanation.
Question 1Closing is July 1. This year's property taxes are unpaid, and the buyer will pay the full bill when it arrives in the fall. The seller's share is $1,640. How is it entered?
- A. Debit seller $1,640 and credit buyer $1,640
- B. Credit seller $1,640 and debit buyer $1,640
- C. Debit seller $1,640 and debit buyer $1,640
- D. Debit seller $1,640 with no buyer entry
Show answer and explanation →
Answer: A. Debit seller $1,640 and credit buyer $1,640
The seller owes for the months the seller owned the home, and the buyer will pay that bill later, so the seller is debited and the buyer credited. Reversing the entries treats the taxes as if the seller had prepaid them. A proration moves money between the parties, so it appears as a debit to one and an equal credit to the other.
Question 2The seller prepaid a $1,200 annual pest-control contract that transfers to the buyer. At closing, $450 of the paid coverage remains for the buyer's ownership. What is the entry?
- A. Debit seller $450 and credit buyer $450
- B. Debit buyer $750 and credit seller $750
- C. Debit buyer $1,200 and credit seller $1,200
- D. Debit buyer $450 and credit seller $450
Show answer and explanation →
Answer: D. Debit buyer $450 and credit seller $450
The seller paid for coverage the buyer will use, so the buyer reimburses the unused $450 with a buyer debit and a seller credit. Debiting the seller treats a prepaid item like an unpaid one. $750 is the seller's own used portion, and $1,200 is the full year.
Question 3The seller collected June rent of $2,100 on June 1. Closing is June 21, the buyer owns closing day, and rent is prorated on a 30-day month. What is the entry?
- A. Debit seller $700 and credit buyer $700
- B. Debit buyer $700 and credit seller $700
- C. Debit seller $630 and credit buyer $630
- D. Debit seller $1,400 and credit buyer $1,400
Show answer and explanation →
Answer: A. Debit seller $700 and credit buyer $700
The buyer owns June 21 through 30, 10 days at $70, so the seller hands over $700 of rent already collected: debit seller, credit buyer. Debiting the buyer reverses who holds the money. $630 drops closing day from the buyer's count.
Ready to move on?
You have this calculation down when all of these are true.
- I define debit and credit from each party's perspective.
- I determine whether an item is paid in advance or arrears.
- I can explain who holds the money and who used the benefit.
- I balance each two-party proration.
- I follow the stated contract facts instead of a memorized local custom.
Recommended next lesson
Continue with Percent, Decimal, and Fraction Conversions. With direction settled, the next lesson fixes the conversions that spoil the amounts, such as reading 27.5 mills as 0.0275 and 7.25% as 0.0725.
Return to the complete calculation hub, formula sheet, or mixed math drill.