Question

Need help calculating average daily balance

Calculate the average daily balance and finance charge. (Round your answers to the nearest cent.)


30-day billing cycle
9/16 Billing date Previous balance $ 2,700
9/19 Payment $ 67 cr.
9/30 Charge: Home Depot 1,850
10/3 Payment 67 cr.
10/7 Cash advance 77


Finance charge is 1.25% on average daily balance.


Average daily balance $
Finance charge $

I've tried every which way and can't seem to figure it out.
3 days at $2700 = 8100
11 days at 2633(2700-67) =28963
3 days at 4483(2633+1850) =13449
4 days at 4416(4483-67)=17667
9 days at 4493(4416+77) =40437
total 108616 divided by 30 = 3620.53
but that's incorrect.
can anyone help me figure this out?

Answer 1

There is a minor error in your next-to-last product: 4 days at 4616 = 17664, which reduces your ADB by 0.10 to $3620.43.

If your discrepancy is more serious than that, perhaps it is because of the way you count days in the billing cycle. Counting the billing date as part of the previous billing cycle changes your day counts to 2, 11, 3, 4, 10, and your ADB to $3680.20.