On the May 1 billing date, Mary had a balance due of $970.60 on her credit card. The transactions during the following month were:
May 5 Payment $400.00
May 10 Charge: airline tickets $381.00
May 22 Charge: hotel $270.60
May 25 Charge: florist $60.20
The interest rate on the card is 1.2% per month. Using the average daily balance method, find the finance charge and balance due on June 1.
Using the Table format
(1) DATE
(2) CHARGE
(3) PAYMENT
(4) BALANCE
(5) No.OF BALANCE DAYS DOES NOT CHANGE
(6) BALANCE* No. of Days
May 1 Balance is 970.60
May 5 (3)Payment 400 and (4)balance = 570.60 what will be number 5 and 6
May 10 (2)Charge 381 and (4)balance = 951.60 what will be number (5) and (6)
May 22 (2)Charge 270.60 and (4)balance = 1222.20 what will be number (5) and (6)
May 25 (2)Charge 60.20 and (4)balance = 1282.40 what will be number (5) and (6)
Please Help
Can Please someone check if i did this right
970.60*4 = 3882.4
970.60-400 = 570.60 * 5 =2853
570.6+381 = 951.6*12 = 11419.2
951.6+270.6=1222.20*3 = 3666.6
1222.2+60.2 = 1282.40*7 = 8976.80
total AVD = 30798/31 = 993.48
Finance charge = 993.48*0.012 = 11.92
To calculate the finance charge and balance due on June 1 using the average daily balance method, we need to calculate the average daily balance for each day in May. Here is the breakdown:
May 1 (1) Balance = $970.60
May 5 (3) Payment $400: (5) Number of Balance Days does not change.
(6) Balance * Number of Days = $570.60 * 4 = $2,282.40
May 10 (2) Charge $381: (5) Number of Balance Days = 5
(6) Balance * Number of Days = $951.60 * 5 = $4,758.00
May 22 (2) Charge $270.60: (5) Number of Balance Days = 12
(6) Balance * Number of Days = $1,222.20 * 12 = $14,666.40
May 25 (2) Charge $60.20: (5) Number of Balance Days = 3
(6) Balance * Number of Days = $1,282.40 * 3 = $3,847.20
Next, we need to sum up all the amounts from (6) and divide by the total number of balance days in May (31).
Total = $2,282.40 + $4,758.00 + $14,666.40 + $3,547.20 = $25,553.00
Average Daily Balance = $25,553.00 / 31 = $825.52
Now we can calculate the finance charge:
Finance Charge = Average Daily Balance * Interest Rate
Finance Charge = $825.52 * 1.2% = $9.91
To find the balance due on June 1, we add the finance charge to the balance on May 31:
Balance due on June 1 = Balance on May 31 + Finance Charge
Balance due on June 1 = $1,282.40 + $9.91 = $1,292.31
Therefore, the finance charge on June 1 using the average daily balance method is $9.91, and the balance due on June 1 is $1,292.31.