**Educational Website Text: Understanding Credit Account Calculations**This table demonstrates how to calculate the missing information on a revolving credit account. Interest is computed based on the unpaid or previous month's balance, with results rounded to the nearest cent.| **Description** | **Value** ||-------------------------------------|-----------------|| Previous Balance | $1,025.61 || Annual Percentage Rate (APR) | Blank (to fill) || Monthly Periodic Rate (as a %) | 1% || Finance Charge (in $) | Blank (to fill) || Purchases and Cash Advances | $322.20 || Payments and Credits | $400.00 || New Balance (in $) | Blank (to fill) |**Steps for Calculation:**1. **Annual Percentage Rate (APR):** - Since the Monthly Periodic Rate is given as 1%, APR can be calculated as follows: $ \text{APR} = \text{Monthly Periodic Rate} \times 12 = 1\% \times 12 = 12\% $.2. **Finance Charge:** - The Finance Charge is calculated as a percentage of the previous balance. - $ \text{Finance Charge} = \text{Previous Balance} \times \text{Monthly Periodic Rate} = \$1,025.61 \times 0.01 = \$10.26 $.3. **New Balance:** - Calculate the new balance using the formula: $ \text{New Balance} = \text{Previous Balance} + \text{Finance Charge} + \text{Purchases and Cash Advances} - \text{Payments and Credits} $. - Substitute the known values: $ \text{New Balance} = \$1,025.61 + \$10.26 + \$322.20 - \$400.00 = \$958.07 $.This exercise helps to understand the components affecting your credit balance and how each aspect is calculated, reinforcing smart financial practices.

Formula: Annual percentage rate = Monthly rate x 12 Months

Calculate the missing information on the revolving credit account. Interest is calculated on the unpaid or previous month's balance. (Round dollars to the nearest cent.) Monthly Periodic Purchases and Cash Advances Annual Finance Payments and Credits New Previous Percentage Rate (APR) Charge (in $) Balance Balance Rate (in $) (as a %) $1,025.61 % 1% $322.20 $400.00

Calculate the missing information on the revolving credit account. Interest is calculated on the unpaid or previous month's balance. (Round dollars to the nearest cent.) Monthly Periodic Purchases and Cash Advances Annual Finance Payments and Credits New Previous Percentage Rate (APR) Charge (in $) Balance Balance Rate (in $) (as a %) $1,025.61 % 1% $322.20 $400.00

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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