Question

36. James has a revolving credit account at an annual percentage rate of 18%. Use the...

36. James has a revolving credit account at an annual percentage rate of 18%. Use the average daily balance method to find the new balance given the following activity.

Statement of Account Billing Cycle: May 1–31
May 1 Balance $239.28
May 9 Payment 45.30
May 18 Yo Yogurt (credit) 67.83
May 26 Fresh Flowers 92.33
May 30 Liu Printing 81.88

a. $295.85

b. $300.36    

c. $303.33

d. $336.03

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Answer #1

Correct Answer : C

Balance Days Daily Balance
239.28 8 239.28*8=1914.24
239.28-45.3=193.98 9 193.98*9=1745.82
193.98-67.83=126.15 8 126.15*8=1009.2
126.15+92.33=218.48 4 218.48*4=873.9
218.48+81.88=300.36 2 300.36*2=600.72
Sum of each day Balance 6143.9

Average Daily Balance =6143.9/31=198.19

Finance Charges =198.19*18%*1/12=2.97

New Balance =Opening Balance +pucrchase -Payments &credits + Finance Charges

=239.28-45.3-67.83+92.33+81.88+2.97=300.36+2.97=$303.33

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