Question

For the credit card account, assume one month between billing dates (with the appropriate number of days) and interest of 1.2% per month on the average daily balance. Find (a) the average daily balance, (b) the monthly finance charge, and (c) the account balance for the next billing.

Previous Balance: $784.50

July 6 Billing Date

July 15 Payment $300

July 26 Lunch $35.64

August 4 Concert Tickets $77.75

The average daily balance is ______ .

Answer 1

Given one month between billing dates(with the appropriate number of days)

Given interest on the average daily balance is 1.2% (1.2/100) which is 0.012.

Given Previous Balance: $784.50

July 6 Billing Date

July 15 Payment $300

July 26 Lunch $35.64

August 4 Concert Tickets $77.75

To Find (a) the average daily balance:

July 6 is Billing Date, So number of days from July 6 and July 15 is 9 days

$784.50 9 Days

Previous balance is $784.50

July 15 Payment $300.

So $784.50-$300= $484.5 which is

$484.5 11 Days.

July 26 Lunch $35.64, which on adding with $484.5

$484.5+$35.64= $520.14 which is

$520.14 9 Days.

And August 4 Concert Tickets $77.75

So adding  $520.14+$77.75 = $597.89

$597.892 Days.

So the average daily balance is $784.50 9 Days+$484.5 11 Days+ $520.14 9 Days + $597.892 Days

=> 18267.04/ 31

=>589.26 (589.259354)

So the average daily balance is: $589.26

(b) the monthly finance charge is: 589.26 multiplied by interest

589.260.012

=>7.07

The monthly finance charge is $7.07

(c) the account balance for the next billing:

this will be the previous balance of last month plus monthly finance charge

597.89+7.07

=>$604.96

the account balance for the next billing is $604.96

(a) the average daily balance: $589.26

(b) the monthly finance charge:  $7.07

(c) the account balance for the next billing is $604.96