Let's explain how it works the unpaid-balance method:
Step 1: We know the previou's month unpaid balance. In our case, we don't know this amount.
Step 2: We calculate the interest for the month, multiplying the previous month's unpaid balance by the monthly interest rate. In our exercise, the interest rate is 1.8% and the finacial charge was $ 17.54
Step 3: We add the new purchases of the month. In our case, that amount is $ 376.90.
Step 4: We subtract the payments done. Cody Ray paid $ 250.
Step 5: We calculate the new unpaid balance, thiis way:
New unpaid balance = Previous month's unpaid balance + financial charge + new purchases - payments
Now we can answer our case:
x = Previous month's unpaid balance
r = interest rate in decimal notation (0.018)
f = financial charge (17.54)
x * r = f
Replacing with the values we know:
x * 0.018 = 17.54
x = 17.54/0.018
x = 974.44
Now, we can calculate a, b and c, as follows:
974.44 + 17.54 + 376.90 - 250
1,118.88
a. His unpaid balance is $ 974.44 + 17.54 = $ 991.98
b. His previous balance is $ 974.44
c. His new balance is $ 1,118.88