Concept explainers
(a)
To calculate: The average daily balance of Kwithout new purchase.
Introduction: The average daily balance method uses the average of the daily outstanding balance in a given billing cycle as the base on which the finance charges for the period is calculated.
(b)
To calculate: The finance charge using an average daily balance of K without new purchase assuming APR as 19.2%.
Introduction: The average daily balance method uses the average of the daily outstanding balance in a given billing cycle as the base on which the finance charges for the period are calculated.
(c)
To calculate: The average daily balance of K of April month with a new purchase.
Introduction: The average daily balance method uses the average of the daily outstanding balance in a given billing cycle as the base on which the finance charges for the period are calculated.
(d)
To calculate: The finance changes using an average daily balance of K of with new purchase assuming APR as 19.2%.
Introduction: The average daily balance method uses the average of the daily outstanding balance in a given billing cycle as the base on which the finance charges for the period are calculated.
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Personal Finance (MindTap Course List)
- Your company has loaned money to an outside entity. You earned the monthly interest on the loan but have not received the payment yet. The payment is expected to be received next month. To capture the interest expected to be received in the future, you have created account #901, Interest Receivable, in your chart of accounts and booked the journal entry to DR: Interest Receivable and CR: Interest Income. While the basic journal entry was correct, your manager is questioning how you set up this new account. What needs to be corrected in the chart of accounts shown below, and how would you fix it?arrow_forwardYour company has loaned money to an outside entity. You earned the monthly interest on the loan but did not receive the payment yet. The payment is expected to be received next month. To capture the interest expected to be received in the future you have created account #901 , Interest Receivable in your chart of accounts and booked the journal entry to DR: Interest Receivable and CR: Interest Income. While the basic journal entry was correct, your manager is questioning how you setup this new account. Based on this image of the chart of accounts below what needs to be corrected and how would you correct this?arrow_forwardOn May 1, the billing date, Kayla had a balance due of $673.64 on her credit card. In May, Kayla made a purchase of$264.03 on May 6, made a payment of$100 on May 22, and made another payment of$300 on May 28. Determine her finance charge on June 1 using the previous balance method. Assume that the interest rate is 3.15% per month. Then determine Kayla’s new balance on June 1.arrow_forward
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- Deepa has a revolving credit account at an annual percentage rate of 18%. Her previous monthly balance is $240.97. Find the new balance if Deepa's account showed the following activity. Use the unpaid balance method. STATEMENT OF ACCOUNT Billing cycle: March 1 -31 Choi Home Repair $28.59 31.30 March 3 March 11 March 15 March 20 March 28 Payment Fancy Flowers (credit) Dreamscape Landscaping Cash advance 82.74 40.27 107.90arrow_forward1. What is the current balance that Joe Doe owes? $1270.54 2.What is the total amount that Joe charged for this billing cycle? a. List the purchases that Joe made. 3. How much did Joe pay for his last payment? 4. Why was Joe charged $35 by the credit card company? 5. How much interest was Joe charged for this month? 6. What is the credit limit that Joe has for this credit card? a. What is Joe’s available credit? 7. What is APR for purchases for this credit card? 8. What is the minimum payment amount that Joe must make? 9. When is the due date for Joe to make a payment? 10. Did Joe take a cash advance on this credit card? 11.Why did you think the federal government requires that financial institutions place a “Total Minimum Payment Warning” on all credit card statements?arrow_forwardThe activity on Denise Hellings' Sears account for one billing period is shown below. Find the average daily balance and the finance charge if the billing period is March 1 through March 31, the previous balance was $154.97, and the annual simple interest rate is 21%. (Round your answers to the nearest cent.) March 5 payment $35.00 March 17 tools $38.57 what is the average daily balance? what is the finance charge?arrow_forward