Solve the problem.
-The unpaid balance in an account on May 1 was $184. A purchase of $35 was made on May 3. A $ 75 payment was made on May 17. The finance charge rate was 1.65% per month of the average daily balance. Find the new balance at the end of May.

Question

Quizplus · Accepted Answer

To find the new balance at the end of the month, we need to calculate the average daily balance first.
From May 1 to May 2, the balance was $184.
From May 3 to May 16, the balance was $219 ($184 + $35).
From May 17 to May 31, the balance was $144 ($219 - $75).
The number of days in each period:
May 1 to May 2 = 1 day
May 3 to May 16 = 14 days
May 17 to May 31 = 15 days
Average daily balance = [(184 x 1) + (219 x 14) + (144 x 15)] / 30 = $176.60
Finance charge = 1.65% x $176.60 = $2.91
New balance = $219 - $75 + $2.91 = $146.91
Rounding to the nearest cent, the answer is C) $146.98 To find the new balance at the end of May, we need to find the average daily balance for the month and then add any finance charges.

First, we need to find the number of days in the month of May:

May has 31 days

Next, we can find the average daily balance by multiplying the number of days for each balance amount, adding them up, and then dividing by the total number of days in the month:

(184 x 1) + (149 x 2) + (74 x 14) = 1429
31

Average daily balance = $46.10

Now, we can calculate the finance charge for the month:

Finance charge = average daily balance x finance charge rate x number of days in the month
Finance charge = $46.10 x 1.65% x 31
Finance charge = $23.88

Finally, we can add the finance charge to the ending balance after the payment was made:

$149 – $75 + $35 + $23.88 = $146.98

Therefore, the new balance at the end of May is $146.98. The correct answer is C.

Solve the Problem. -The Unpaid Balance in an Account on May 1 Was