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 help me with this
Thanks
To find the finance charge and balance due on June 1 using the average daily balance method, we need to calculate the average daily balance for the month of May.
Here's how you can calculate it:
Step 1: Calculate the daily balances for each transaction:
- May 1: Balance is $970.60
- May 5: Payment of $400.00, so the balance after payment is $570.60
- May 10: Charge of $381.00, so the balance after the charge is $951.60
- May 22: Charge of $270.60, so the balance after the charge is $1222.20
- May 25: Charge of $60.20, so the balance after the charge is $1282.40
Step 2: Calculate the number of days for each balance:
- May 1 to May 5: 5 days
- May 6 to May 10: 5 days
- May 11 to May 22: 12 days
- May 23 to May 25: 3 days
Step 3: Calculate the balance * number of days for each period:
- May 1 to May 5: $570.60 * 5 = $2,853.00
- May 6 to May 10: $951.60 * 5 = $4,758.00
- May 11 to May 22: $1222.20 * 12 = $14,666.40
- May 23 to May 25: $1282.40 * 3 = $3,847.20
Step 4: Add up all the balance * number of days:
$2,853.00 + $4,758.00 + $14,666.40 + $3,847.20 = $26,124.60
Step 5: Divide the total balance * number of days by the total number of days in the billing cycle:
$26,124.60 / 31 days = $842.72 (average daily balance)
Step 6: Calculate the finance charge:
$842.72 * 1.2% = $10.11 (finance charge)
Step 7: Add the finance charge to the balance due on May 1:
$970.60 + $10.11 = $980.71 (balance due on June 1)
Therefore, the finance charge is $10.11 and the balance due on June 1 is $980.71.