A credit card account had a balance of $968 on May 5. A purchase of $295 was made on May 17, and a payment of $100 was made on May 20. The interest on the average daily balance is 1.7% per month. Find the average daily balance on the June 5 bill
To find the average daily balance on the June 5 bill, we need to calculate the sum of the daily balances for the period from May 5 to June 4, and divide it by the number of days in that period.
First, we need to determine the number of days for each transaction:
- From May 5 to May 16 (inclusive), there are 12 days.
- On May 17, a purchase of $295 was made, meaning that this amount will be added to the balance for 19 days.
- On May 20, a payment of $100 was made, meaning that this amount will be deducted from the balance for 22 days.
- From May 21 to June 4 (inclusive), there are 15 days.
Next, we calculate the daily balances for each period:
- From May 5 to May 16: $968 for 12 days = $11,616
- May 17: ($968 + $295) for 19 days = $13,813
- May 18 to May 19: ($968 + $295) for 2 days = $2,526
- May 20: ($968 + $295 - $100) for 3 days = $2,811
- May 21 to June 4: ($968 - $100) for 15 days = $13,020
Now we can calculate the total balance for the period:
Total balance = $11,616 + $13,813 + $2,526 + $2,811 + $13,020 = $43,786
Finally, we divide the total balance by the number of days in the period:
Average daily balance = $43,786 / 61 days
Therefore, the average daily balance on the June 5 bill is approximately $718.46.
To find the average daily balance on the June 5 bill, we need to calculate the average daily balance for the entire billing period.
Step 1: Determine the number of days between May 5 and June 5.
There are 31 days in May, so the number of days between May 5 and May 31 is 26. In June, there are 5 days before June 5. Therefore, the total number of days between May 5 and June 5 is 26 + 5 = 31 days.
Step 2: Calculate the total balance for the entire billing period.
The initial balance on May 5 was $968. A purchase of $295 was made on May 17, so the total balance increased to $968 + $295 = $1263. A payment of $100 was made on May 20, so the balance decreased to $1263 - $100 = $1163.
Step 3: Calculate the average daily balance.
To calculate the average daily balance, we need to find the sum of the balances for each day and divide it by the total number of days.
Total balance = ($968 * 26) + ($1263 * 5) = $25168 + $6315 = $31483
Average daily balance = Total balance / Total number of days = $31483 / 31 = $1015.26
Therefore, the average daily balance on the June 5 bill is approximately $1015.26.