Question

Calculate the average daily balance and finance charge. (Round your answers to the nearest cent.) $ 1,000 30-day billing cycle Billing date Previous balance Payment Charge: Home Depot Payment 9/16 9/19 9/30 10/3 $ 50 CE 1,000 50 r. 10/7 Cash advance 60 . Finance charge is 1% on average daily balance. Average daily balance Finance charge

Answer 1

Solution:

a)Calculation Of Average Daily Balance :

Date	Transactions	Ending Balance
9/16	Opening Balance	$1000
9/17 to 9/18		$1000 x 2 = $2000 (sum of two days ending balance)
9/19	Payment $50	$950
9/20 to 9/29		$950 x 10 = $9500 (sum of ten days ending balance)
9/30	charge: $1000	$1950
10/1 to 2/10		$1950 x 2 = $3900 (sum of two days ending balance)
3/10	Payment $50	$1900
4/10 to 6/10		$1900 x 3 =$5700 (sum of three days ending balance)
7/10	cash advance $60	$1960
8/10 to 15/10		$1960 x 8 = $15680 (sum of eight days ending balance)
Sum of daily Balances		$44540

Average Daily Balance= Sum of balance at the end of each day/ total number of days in billing cycle

Average Daily Balance=$44,540/30= $1484.67

b)Finance charge=  Average Daily Balance x 1%

$1484.67 x 1% = $14.85

Average Daily Balance	$1484.67
Finance charge	$14.85