Kessler Co., makes a credit card sale to a customer for $600. The credit card sale has a grace period of 30 days and then an interest charge of 1.5% per month is added to the balance. If the unpaid balance on the above sale is $360 at the end of the grace period, the interest charge is

Question

Quizplus · Accepted Answer

First, we need to calculate how many months the balance is past the grace period:

$360 / $600 = 0.6

This means the balance has been unpaid for 0.6 months (or 18 days).

Next, we need to calculate the interest charge using the formula:

Interest = Balance x Rate x Time

where Rate is the monthly interest rate (1.5%) and Time is the number of months the balance has been unpaid (0.6).

Interest = $360 x 0.015 x 0.6 = $5.40

Therefore, the interest charge on the unpaid balance is $5.40. The answer is D.