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 previous month. The starting balance and transactions on the account for the month of April are given to the right. Assume an annual interest rate of 18%.
Month: April (30 days); previous month's balance: $310
The finance charge is $_______?
|
April 55 |
Charged
$9898 for a coat |
|
April 1717 |
Made payment of
$7070 |
|
April 2323 |
Charged
$101101 for DVDs |
|
April 2828 |
Charged
$1414 for groceries |
Solutions
Expert Solution
| Date | Opening balance | Debits | Credits | Closing balance | |
| 1-Apr | 310.00 | - | - | 310.00 | |
| 2-Apr | 310.00 | - | - | 310.00 | |
| 3-Apr | 310.00 | - | - | 310.00 | |
| 4-Apr | 310.00 | - | - | 310.00 | |
| 5-Apr | 310.00 | 98.00 | - | 408.00 | |
| 6-Apr | 408.00 | - | - | 408.00 | |
| 7-Apr | 408.00 | - | - | 408.00 | |
| 8-Apr | 408.00 | - | - | 408.00 | |
| 9-Apr | 408.00 | - | - | 408.00 | |
| 10-Apr | 408.00 | - | - | 408.00 | |
| 11-Apr | 408.00 | - | - | 408.00 | |
| 12-Apr | 408.00 | - | - | 408.00 | |
| 13-Apr | 408.00 | - | - | 408.00 | |
| 14-Apr | 408.00 | - | - | 408.00 | |
| 15-Apr | 408.00 | - | - | 408.00 | |
| 16-Apr | 408.00 | - | - | 408.00 | |
| 17-Apr | 408.00 | - | 70.00 | 338.00 | |
| 18-Apr | 338.00 | - | - | 338.00 | |
| 19-Apr | 338.00 | - | - | 338.00 | |
| 20-Apr | 338.00 | - | - | 338.00 | |
| 21-Apr | 338.00 | - | - | 338.00 | |
| 22-Apr | 338.00 | - | - | 338.00 | |
| 23-Apr | 338.00 | 101.00 | - | 439.00 | |
| 24-Apr | 439.00 | - | - | 439.00 | |
| 25-Apr | 439.00 | - | - | 439.00 | |
| 26-Apr | 439.00 | - | - | 439.00 | |
| 27-Apr | 439.00 | - | - | 439.00 | |
| 28-Apr | 439.00 | 14.00 | - | 453.00 | |
| 29-Apr | 453.00 | - | - | 453.00 | |
| 30-Apr | 453.00 | - | - | 453.00 | |
| Total | 213.00 | 70.00 | 11,718.00 | [A] | |
| Number of days | 30 | [B] | |||
| Average balance | 390.60 | [A/B] | |||
| Interest rate | 18.00% | ||||
| Interest to be paid | 5.78 | [ 390.6 × 0.18 × 30/365 ] | |||
| End of period balance | 458.78 | [ 453 + 5.78] |
Finance charge for April is 5.78
please rate.
jeff jeffy answered 1 year agoRelated Solutions
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