Question

On April 1, the unpaid balance in an account was $214. A payment of $75 was made on April 6. On April 24, a $27 purchase was made. The finance charge rate was 1.15% per month of the average daily balance. Find the new balnce at the end of April.

Answer 1

Calculation of average daily balance
	Date	Opening balance	Transaction	Closing balance	No.of days	Closing balance *no. of days
	1-Apr	$214	-	$214	5	$1,070
	6-Apr	$214	($75)	$139	18	$2,502
	24-Apr	$139	$27	$166	7	$1,162
					Total	$4,734
	Average balance outstanding			=	(Total of closing balance *no. of days)/30
				=	$4734/30
				=	$            157.80
		Finance charge		=	Average daily balance*rate per month
				=	$157.8*1.15%
				=	$                1.82
		New balance at the end of aprl		=	Closing balance +finance charge
				=	$166+$1.82
				=	$            167.82
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