Question

Mr. H has a demand deposit with transactions as following at ABC:

Opening balance at the first quarter: 10,000,000 VND.

Demand deposit interest rate: 2%/year

Unit:VND

Request: Calculate the balance of demand deposit at the end of the third quarter of this client.

Note: The bank adds the interest of demand deposit at the end each month.

Answer 1

According to the bank, debit side gets deducted and credit side gets added. And we have to calculate interest rate at the end of the month so, we have to find the balance at the end of the month. Given,

Interest rate = 2% / 12 = 0.001667/ month

 

July:

Balance = Opening - Debit side + Credit Side

= 10,000,000 -2,000,000 + (2,500,000 + 3,000,000)

= 13,500,000

Interest = 13,500,000*0.001667= 22500

Opening for the next month = 13,500,000+22,500 = 13,522,500

 

August:

Balance = Opening - Debit side + Credit Side = 13,522,500 - 2,650,000+ 12,000,000 = 22,872,500

Interest = 22,872,500*0.001667

= 38,120.8334

 

Opening for the next month = 22,872,500+38,120.8334

= 22,910,620.8

 

September:

Balance = Opening - Debit side + Credit Side = 22,910,620.8- (12,500,000+4,000,000) + 10,000,000

= 16,410,620.8

Interest = 16,410,620.8*(0.001667)

= 27,356.5049

Opening for the next month =

16,410,620.8+27,356.5049

= 16,437,977.3

 

It means the balance at the end of the third quarter is 16,437,977.3.

It means the balance at the end of the third quarter is 16,437,977.3.