You have a revolving credit account at an annual percentage rate of 18%. Use the average daily balance method to find the new balance given the following statement of account: $$\begin{array}{l}
\text { STATEMENT OF ACCOUNT Billing cycle: July 1-31 }\
\begin{array} { | l | l | l | }
\hline \text { July } 1 & \text { Previous month's balance } & \$ 163.85 \
\hline \text { July } 5 & \text { McDermott Engineering } & 35.95 \
\hline \text { July } 9 & \text { Payment } & 32.30 \
\hline \text { July } 17 & \text { Hi-Def Video (credit) } & 23.31 \
\hline \text { July } 25 & \text { Sunny Flowers } & 30.93 \
\hline
\end{array}
\end{array}$$

Question

You have a revolving credit account at an annual percentage rate of 18%. Use the average daily balance method to find the new balance given the following statement of account: $$\begin{array}{l}
\text { STATEMENT OF ACCOUNT Billing cycle: July 1-31 }\
\begin{array} { | l | l | l | } 
\hline \text { July } 1 & \text { Previous month's balance } & \$ 163.85 \
\hline \text { July } 5 & \text { McDermott Engineering } & 35.95 \
\hline \text { July } 9 & \text { Payment } & 32.30 \
\hline \text { July } 17 & \text { Hi-Def Video (credit) } & 23.31 \
\hline \text { July } 25 & \text { Sunny Flowers } & 30.93 \
\hline
\end{array}
\end{array}$$

Quizplus · Accepted Answer

The average daily balance is calculated by adding the previous month's balance to the current month's purchases and subtracting any payments or credits. The average daily balance for this statement is:(163.85 + 35.95 - 32.30 + 23.31 + 30.93) / 31 = 177.62The new balance is then calculated by adding the average daily balance to the interest charge. The interest charge is calculated by multiplying the average daily balance by the annual percentage rate and dividing by 365. The interest charge for this statement is:177.62 * 0.18 / 365 = 0.17The new balance is then:177.62 + 0.17 = 177.79The closest answer choice is A) $177.62.

You Have a Revolving Credit Account at an Annual Percentage