Question

Dwayne had a balance of $95.13 in his checking account on Monday morning. That day he used his debit card for the following transactions: breakfast at the corner bagel shop: $8.53, gas in the car: $28.60, cable bill: $65.39, oil change: $30.64. Dwayne's bank uses a balance system of debiting from highest to lowest. The bank will not return amounts up to a total of $50 in overdrafts, but they do charge a fee for each overdraft. How many overdraft fees will Dwayne incur?

a. 1
b. 2
c. 3
d. 4

Answer 1

To calculate the number of overdraft fees Dwayne will incur, we need to keep track of his spending and his bank's overdraft policy. Dwayne made four transactions, and since his bank uses a balance system of debiting from highest to lowest, his account balance will be reduced by the largest transactions first. Dwayne will incur 2 overdraft fees because he went over his available balance for two transactions.

Step-by-step explanation:

To calculate the number of overdraft fees Dwayne will incur, we need to keep track of his spending and his bank's overdraft policy. Dwayne's initial balance is $95.13. He made four transactions: breakfast $8.53, gas $28.60, cable bill $65.39, and an oil change $30.64. Since Dwayne's bank uses a balance system of debiting from highest to lowest, his account balance will be reduced by the largest transactions first. However, the bank does not return overdrafts up to a total of $50, and they charge a fee for each overdraft.

Let's calculate Dwayne's account balance after each transaction:

1. Balance - breakfast = $95.13 - $8.53 = $86.60
2. Balance - gas = $86.60 - $28.60 = $58.00
3. Balance - cable bill = $58.00 - $50.00 = $8.00 (overdraft)
4. Balance - oil change = $8.00 - $30.64 = -$22.64 (overdraft)

Dwayne will incur 2 overdraft fees because he went over his available balance for two transactions.