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
a.$5.30
To calculate the finance charge and balance due on June 1 using the average daily balance method, you need to follow the steps correctly. Let's go through them together:
1) Start with the balance on May 1: $970.60.
2) On May 5, a payment of $400 was made. Subtract this payment from the previous balance: $970.60 - $400 = $570.60.
The number of balance days does not change, which is 4. Multiply the balance by the number of days: $570.60 * 4 = $2,282.40.
Here, the remaining balance is $570.60, and the number of balance days is 5. Multiply them: $570.60 * 5 = $2,853.
3) On May 10, a charge of $381 was made. Add this charge to the previous balance: $570.60 + $381 = $951.60.
The number of balance days remains the same, which is 5. Multiply the balance by the number of days: $951.60 * 5 = $4,758.
4) On May 22, another charge of $270.60 was made. Add this charge to the previous balance: $951.60 + $270.60 = $1,222.20.
Again, the number of balance days remains the same, which is 5. Multiply the balance by the number of days: $1,222.20 * 3 = $3,666.60.
5) Lastly, on May 25, a charge of $60.20 was made. Add this charge to the previous balance: $1,222.20 + $60.20 = $1,282.40.
Once more, the number of balance days remains the same, which is 3. Multiply the balance by the number of days: $1,282.40 * 3 = $3,847.20.
6) Calculate the total average daily balance (AVD). Add up all the products from step 2, 3, 4, and 5: $2,282.40 + $2,853 + $4,758 + $3,666.60 + $3,847.20 = $17,407.20.
Divide this total AVD by the number of days in the billing period (31): $17,407.20 / 31 = $561.20.
7) Finally, determine the finance charge. Multiply the AVD by the monthly interest rate (1.2% or 0.012): $561.20 * 0.012 = $6.73.
Therefore, the finance charge on June 1 is $6.73, and the balance due will be the previous month's balance ($970.60) plus the finance charge: $970.60 + $6.73 = $977.33.