Kathy Hansen has a revolving credit account. The finance charge is calculated on the previous month's balance, and the annual percentage rate is 21%. Complete the following five-month account activity table for Kathy.
Previous | Purchases | ||||
Month's | Finance | and Cash | Payments | Nest Balance | |
Month | Balance | Charge | Advances | and Credits | End of Month |
9. | April | _____ | _____ | $46.45 | $65.00 |
_____
To calculate: The finance charge and the new balance if Kathy Hansen has a revolving credit account, the previous month’s balance is
Given Information:
Kathy Hansen has a revolving credit account, the previous month’s balance is
Formula used:
Follow the steps mentioned below to compute the finance charge and new balance by using the unpaid balance method:
Step 1: The monthly periodic rate is computed by dividing the annual percentage rate by the number of months in a year that is
Step 2: The finance charge is computed by multiplying the balance of the previous month with the monthly periodic rate.
Step 3: The new balance is computed by adding all previous month balance, finance charge, purchases and cash advances and subtracting the total of payments and credits.
Calculation:
Consider that the previous month’s balance is
Compute monthly periodic rate by substituting annual percentage rate equals to
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