Question

Peggy Andrews has a charge account at Davis Jewelers, which uses the unpaid-balance method of computing finance charges. The periodic rate is 1.75 percent. Andrews’ previous balance is $9,472.08. She had payments and credits of $250.00. Andrews had $45.00 in new purchases. What is the new account balance?

Answer 1

Answer: New account balance = $9,428.47

Explanation:

Given the following ;

Andrew's Account Details at Davis jewelers :

Previous account balance = $9,472.08

Payment and credit = $250.00

New purchase = $45.00

Periodic rate = 1.75%

Using the unpaid balance method, Andrew's account balance can be calculated thus;

Unpaid balance = (previous balance - payment and credit balance)

Unpaid balance = $(9,472.08 - 250) = $9222.08

Interest is charged on unpaid balance :

0.0175 × $9222.08 = $161.39

Therefore, new account balance :

Unpaid balance + interest amount + new purchase

$(9,222.08 + 161.39 + 45) = $9,428.47

Answer 2

Answer:

Therefore the new account balance is $9428.47

Explanation:

Given that:

Peggy Andrews has a charge account at Davis Jewelers, which uses the unpaid-balance method of computing finance charges.  

The periodic rate = 1.75%

Andrews’ previous balance = $9,472.08

Andrews credit payments = $250

Andrews new purchases = $45

To get the unpaid balance, we subtract Andrews credit payments from her previous balance.

Therefore the unpaid balance = $9472.08 - $250 = $9222.08

Periodic rate = 1.75% of unpaid balance = 0.0175 × $9222.08 = $161.39

The new account balance =  unpaid balance + periodic rate + payments and credits = $9222.08 + $161.9 + $45 = $9428.47

Therefore the new account balance is $9428.47