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8 December, 17:41

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

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Answers (1)
  1. 8 December, 21:30
    0
    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.
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