Question

Combine the information in the problem and the chart using the average balance method to solve the problem. The account balance on April 1st is $50.51. On April 15th, a payment of $15.00 is made. What is the average daily balance for the account

Answer 1

Answer:

$42.51

Explanation:

The daily balance during April 1st to April 14th was $50.51, then from April 15th to April 30th is was 35.51.

average daily balance = [($50.51 x 14 days) + ($35.51 x 16 days)] / 30 days = ($707.14 + $568.16) / 30 days = $42.51

The average daily balance is used to calculate interest charges by adding the debt balance at the end of every day, and then dividing it by the number of days in the month. This method is commonly used by banks that issue credit cards.