Cody Lind's most recent credit card statement follows. His finance charge is 18% APR. Calculate...

Question:

Cody Lind's most recent credit card statement follows. His finance charge is 18% APR. Calculate Cody's average daily balance, finance charge, and new balance. (Round your final answers to the nearest cent.)

30-day billing cycle
9/2 Billing date $1,200 previous balance
9/7 Payment $100 cr.
9/13 Charge: Kohl? s $350
9/17 Payment $200 cr.
9/28 Charge: WalMart $50
Average daily balance $
Finance charge $
New balance $

Credit Card:

A credit card would allow the cardholder to use up to the credit limit for purchases. It is a type of revolving account, which the cardholder can pay off debt my several payments.

Answer and Explanation:

Calculate the average daily balance:

{eq}Average\:Daily\:Balace=\displaystyle\frac{\$1,200\times 5 + (\$1,200-\$100)\times 6+ (\$1,100 +\$350)\times 4 +(\$1,450 - \$200)\times 11 + \$1,300\times 4}{30} = $1,245 {/eq}

Calculate the finance charge:

Assume that there is 365 days in year.

{eq}Finance\:Charge = \displaystyle $1,245\times 18\%\times\frac{30}{365} = $18.42{/eq}

Calculate the new balance:

{eq}New\:Balance = $1,300 + $18.42 = $1,318.42 {/eq}


Learn more about this topic:

Loading...
How to Calculate Interest Expense: Formula & Example

from Financial Accounting: Help and Review

Chapter 5 / Lesson 18
37K

Related to this Question

Explore our homework questions and answers library