Question

Cody Lind’s most recent credit card statement follows. His finance charge is 15% 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	$1,240		previous balance
9/7	Payment	$600		cr.
9/13	Charge: Kohl’s	$600
9/17	Payment	$450		cr.
9/28	Charge: WalMart	180

Average daily balance	$
Finance charge	$
New balance

Answer 1

1. Average daily balance = Sum of balance at the end of each day/ no of days in billing cycle

=28770/30

=$959

Working notes:

Date	Payment	Charge	balance
02-Sep			1240
03-Sep			1240
04-Sep			1240
05-Sep			1240
06-Sep			1240
07-Sep	600		640
08-Sep			640
09-Sep			640
10-Sep			640
11-Sep			640
12-Sep			640
13-Sep		600	1240
14-Sep			1240
15-Sep			1240
16-Sep			1240
17-Sep	450		790
18-Sep			790
19-Sep			790
20-Sep			790
21-Sep			790
22-Sep			790
23-Sep			790
24-Sep			790
25-Sep			790
26-Sep			790
27-Sep			790
28-Sep		480	1270
29-Sep			1270
30-Sep			1270
01-Oct			1270
			28770

2. Finance charge= Average Balance*APR* No of days in billing cycle/365

=959*.15*30/365

=$11.82

3. new balance= $1270+11.82= $1281.82