For the credit card account below, compute the average daily balance, the finance charge, and the account balance for the next billing. Assume the account is billed on the same date each month and that the annual interest rate is 13.2%. This credit card company calculates the finance charge on the average daily balance, but they consider each month of a year instead of using the number of days in the month. 12 Previous Balance: $657 March 14 Billing Date March 18 Returns $106 March 22 Payment $117 March 23 Concert Tickets $92 March 26 Groceries $97 March 29 Cash Advance $93 Average Daily Balance: Finance Charge: Account Balance for the Next Billing:

For the credit card account below, compute the average daily balance, the finance charge, and the account balance for the next billing. Assume the account is billed on the same date each month and that the annual interest rate is 13.2%. This credit card company calculates the finance charge on the average daily balance, but they consider each month of a year instead of using the number of days in the month. 12 Previous Balance: $657 March 14 Billing Date March 18 Returns $106 March 22 Payment $117 March 23 Concert Tickets $92 March 26 Groceries $97 March 29 Cash Advance $93 Average Daily Balance: Finance Charge: Account Balance for the Next Billing:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Find the average daily balance for the credit card with the following transactions. Assume one month between billing dates using the proper number of days in the month. Then find the finance charge if interest is 1.5% per month on the average dally balance. Finally, find the new balance. Previous Balance: $556.32 Billing date: July 9 July 15, Return, $114.45 July 17, Purchase, $98.12 July 25, Purchase, $76.12 August 7, Payment, $110 What is the average daily balance? What is the finance charge? What is the new balance?
Suppose your MasterCard calculates interest using the average daily balance method, and the monthly interest rate is 1.9%. The itemized billing for the month of August is shown below The average daily balance has already been computed and is $2739.52. (a) Find the interest due for this month. $ (b) Find the total balance owed on the last day of the billing period. $ (c) This credit card requires a $15 minimum payment or 1/24 of the amount due, whichever is higher. What is the minimum monthly payment due for this month? $
Suppose your MasterCard calculates interest using the average daily balance method, and the monthly interest rate is 1.6%. The itemized billing for the month of August is shown below. Detail Unpaid balance Charge Charge Charge Payment received Last day of billing period Payment due date Date August 1 August 9 August 10 August 18 August 25 August 31 September 7 (a) Find the average daily balance. $ (b) Find the interest due for this month. $ Amount 1085 125 1130 140 995 (c) Find the total balance owed on the last day of the billing period. $ (d) This credit card requires a $15 minimum payment or 1/24 of the amount due, whichever is higher. What is the minimum monthly payment due for this month? $
K 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 $240. The transactions on the account for the month are given in the table to the right. Assume an annual interest rate of 20% on the account and that the billing date is August 1st. The finance charge for the month of August is $ (Round to the nearest cent as needed.) Date August 5 Transaction Made payment of $88 August 14 Charged $140 for hiking boots August 21 Charged $18 for gasoline August 25 Charged $34 for restaurant meal
For the credit card account below, compute the average daily balance, the finance charge, and the account balance for the next billing. Assume the billing cycle bogins on the same date each month and that the interest rate is 16% per month. Previous Balance plus Interest: $1030 April 1 First Day of the Billing Cycle $1030 April 12 Puchase Clothes 569 April 15 Online Purchase $123 April 17 Returns $41 April 27 Purchase Flowers $29 April 28 Payment 5132 Average Daily Balance: Monthly Finance Charge: Account Balance for the start of the Next Billing:
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Calculate the monthly finance charge for the credit card transaction. Assume that it takes 10 days for a payment to be received and recorded, and that the month is 30 days long. (Round your answers to the nearest cent.) $200 balance, 15%, $50 payment () previous balance method $2.77 x (b) adjusted balance method $2.09 x Þ (c) average daily balance method $233 x