Property Management
A Florida property manager is authorized by the owner to collect rents. The manager collects $50,000 in rents, deducts their 8% management fee, and remits the balance to the owner. The proper accounting treatment is:
AThe manager keeps $4,000 and remits $46,000
BThe manager remits all $50,000 and invoices separately for the fee
CEither approach is acceptable as long as it is specified in the management agreement✓ Correct
DThe manager must obtain written owner approval before deducting each month's fee
Explanation
Either method — deducting the fee from collected rents before remitting, or remitting all funds and billing separately — is acceptable as long as the management agreement specifies the method. Most management agreements allow the manager to deduct their fee from collected rents before remitting to the owner.
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