Question

Kwami Endabe's charge account uses the unpaid-balance method. Theperiodic rate is 1.85%. The previous balance is $478.68. He hadpayments of $150 and $60 and an $89.95 credit. He has new purchasesof $38.50, $65.74, and $125.61.

Answer 1

New balance= unpaid balance + Finance charge + new purchases

Finance charge = unpaid times rate

Payments done are: $150 + $60 = $210

Previous balance= $478.68

Unpaid balance= Previous - (payments + credits) = $478.68 - $210 - $89.95 = $178.73

Finance charge = $178.73 times 0.0185 = 3.306505 (which must be rounded to the cent) = $3.31

Therefore,

New Balance = unpaid + Finance charge + new purchases

New Balance = $178.73 + $3.31 + ($38.50+65.74 + 125.61)

New Balance = $411.89