Question
In: Finance
Use the average daily balance method to compute the finance charge on the credit card account...
Use the average daily balance method to compute the finance charge on the credit card account for the month of August (31 days). The starting balance from the previous month is $300. The transactions on the account for the month are given in the table to the right. Assume an annual interest rate of 22% on the account and that the billing date is August 1st.
The finance charge for the month of August is $________?
|
Date |
Transaction |
|---|---|
|
August 66 |
Made payment of
$7575 |
|
August 88 |
Charged
$125125 for hiking boots |
|
August 2121 |
Charged
$2929 for gasoline |
|
August 2828 |
Charged
$2727 for restaurant meal |
Solutions
Expert Solution
| Date | Opening balance | Debits | Credits | Closing balance | |
| 1-Aug | 300.00 | - | - | 300.00 | |
| 2-Aug | 300.00 | - | - | 300.00 | |
| 3-Aug | 300.00 | - | - | 300.00 | |
| 4-Aug | 300.00 | - | - | 300.00 | |
| 5-Aug | 300.00 | - | - | 300.00 | |
| 6-Aug | 300.00 | - | 75.00 | 225.00 | |
| 7-Aug | 225.00 | - | - | 225.00 | |
| 8-Aug | 225.00 | 125.00 | - | 350.00 | |
| 9-Aug | 350.00 | - | - | 350.00 | |
| 10-Aug | 350.00 | - | - | 350.00 | |
| 11-Aug | 350.00 | - | - | 350.00 | |
| 12-Aug | 350.00 | - | - | 350.00 | |
| 13-Aug | 350.00 | - | - | 350.00 | |
| 14-Aug | 350.00 | - | - | 350.00 | |
| 15-Aug | 350.00 | - | - | 350.00 | |
| 16-Aug | 350.00 | - | - | 350.00 | |
| 17-Aug | 350.00 | - | - | 350.00 | |
| 18-Aug | 350.00 | - | - | 350.00 | |
| 19-Aug | 350.00 | - | - | 350.00 | |
| 20-Aug | 350.00 | - | - | 350.00 | |
| 21-Aug | 350.00 | 29.00 | - | 379.00 | |
| 22-Aug | 379.00 | - | - | 379.00 | |
| 23-Aug | 379.00 | - | - | 379.00 | |
| 24-Aug | 379.00 | - | - | 379.00 | |
| 25-Aug | 379.00 | - | - | 379.00 | |
| 26-Aug | 379.00 | - | - | 379.00 | |
| 27-Aug | 379.00 | - | - | 379.00 | |
| 28-Aug | 379.00 | 27.00 | - | 406.00 | |
| 29-Aug | 406.00 | - | - | 406.00 | |
| 30-Aug | 406.00 | - | - | 406.00 | |
| 31-Aug | 406.00 | - | - | 406.00 | |
| Total | 181.00 | 75.00 | 10,777.00 | [A] | |
| Number of days | 31 | [B] | |||
| Average balance | 347.65 | [A/B] | |||
| Interest rate | 22.00% | ||||
| Interest to be paid | 6.29 | [ 347.65 × 0.22 × 31/365 ] | |||
| End of period balance | 412.29 | [ 406 + 6.29] |
Finance charge for Aug is 6.29
please rate.
jeff jeffy answered 2 years agoRelated Solutions
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