Calculate the missing information on the revolving credit account. Interest is calculated on the unpaid or previous month's balance. Previous Balance Annual Percentage Rate (APR) Monthly Periodic Rate (as a %) Finance Charge (in $) Purchases and Cash Advances Payments and Credits New Balance (in $) $1,026.61 1.75% $322.20 $300.00 Step 1 In the credit account statement below, the values of the annual percentage rate (APR), finance charge, and the new balance must be calculated. Previous Balance Annual Percentage Rate (APR) Monthly Periodic Rate (as a %) Finance Charge (in $) Purchases and Cash Advances Payments and Credits New Balance (in $) $1,026.61 1.75% $322.20 $300.00 Recall that the annual percentage rate (APR) is tied to the monthly periodic rate by the following formula. monthly periodic rate = APR 12 By solving this equation for the APR, the known value for the monthly periodic rate can be substituted to calculate the APR. APR = monthly periodic rate ✕ 12 The monthly periodic rate is given to be 1.75%. Find the APR. APR = 12 ✕ monthly periodic rate = 12 ✕ 1.75 1.75 % = 21 21 % Step 2 The APR was found to be 21% based on the periodic rate of 1.75%. This gives the following table. Previous Balance Annual Percentage Rate (APR) Monthly Periodic Rate (as a %) Finance Charge (in $) Purchases and Cash Advances Payments and Credits New Balance (in $) $1,026.61 21% 1.75% $322.20 $300.00 The finance charge is the dollar amount paid for the credit and is also known as the interest. This can be found by multiplying the previous balance by the monthly periodic rate expressed as a decimal. The previous balance is given to be $1,026.61. As a decimal, the monthly periodic rate is 1.75% = . Use these values to find the finance charge, rounding the result to the nearest cent. finance charge = previous month's balance ✕ monthly periodic rate = 1,026.61 ✕ = $

Calculate the missing information on the revolving credit account. Interest is calculated on the unpaid or previous month's balance. Previous Balance Annual Percentage Rate (APR) Monthly Periodic Rate (as a %) Finance Charge (in $) Purchases and Cash Advances Payments and Credits New Balance (in $) $1,026.61 1.75% $322.20 $300.00 Step 1 In the credit account statement below, the values of the annual percentage rate (APR), finance charge, and the new balance must be calculated. Previous Balance Annual Percentage Rate (APR) Monthly Periodic Rate (as a %) Finance Charge (in $) Purchases and Cash Advances Payments and Credits New Balance (in $) $1,026.61 1.75% $322.20 $300.00 Recall that the annual percentage rate (APR) is tied to the monthly periodic rate by the following formula. monthly periodic rate = APR 12 By solving this equation for the APR, the known value for the monthly periodic rate can be substituted to calculate the APR. APR = monthly periodic rate ✕ 12 The monthly periodic rate is given to be 1.75%. Find the APR. APR = 12 ✕ monthly periodic rate = 12 ✕ 1.75 1.75 % = 21 21 % Step 2 The APR was found to be 21% based on the periodic rate of 1.75%. This gives the following table. Previous Balance Annual Percentage Rate (APR) Monthly Periodic Rate (as a %) Finance Charge (in $) Purchases and Cash Advances Payments and Credits New Balance (in $) $1,026.61 21% 1.75% $322.20 $300.00 The finance charge is the dollar amount paid for the credit and is also known as the interest. This can be found by multiplying the previous balance by the monthly periodic rate expressed as a decimal. The previous balance is given to be $1,026.61. As a decimal, the monthly periodic rate is 1.75% = . Use these values to find the finance charge, rounding the result to the nearest cent. finance charge = previous month's balance ✕ monthly periodic rate = 1,026.61 ✕ = $

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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Question

Calculate the missing information on the revolving credit account. Interest is calculated on the unpaid or previous month's balance.

Previous Balance	Annual Percentage Rate (APR)	Monthly Periodic Rate (as a %)	Finance Charge (in $)	Purchases and Cash Advances	Payments and Credits	New Balance (in $)
$1,026.61		1.75%		$322.20	$300.00

Step 1

In the credit account statement below, the values of the annual percentage rate (APR), finance charge, and the new balance must be calculated.

Previous Balance	Annual Percentage Rate (APR)	Monthly Periodic Rate (as a %)	Finance Charge (in $)	Purchases and Cash Advances	Payments and Credits	New Balance (in $)
$1,026.61		1.75%		$322.20	$300.00

Recall that the annual percentage rate (APR) is tied to the monthly periodic rate by the following formula.

monthly periodic rate =

APR

By solving this equation for the APR, the known value for the monthly periodic rate can be substituted to calculate the APR.

APR = monthly periodic rate ✕ 12

The monthly periodic rate is given to be 1.75%. Find the APR.

APR	=	12 ✕ monthly periodic rate
	=	12 ✕ 1.75 1.75 %
	=	21 21 %

Step 2

The APR was found to be 21% based on the periodic rate of 1.75%. This gives the following table.

Previous Balance	Annual Percentage Rate (APR)	Monthly Periodic Rate (as a %)	Finance Charge (in $)	Purchases and Cash Advances	Payments and Credits	New Balance (in $)
$1,026.61	21%	1.75%		$322.20	$300.00

The finance charge is the dollar amount paid for the credit and is also known as the interest. This can be found by multiplying the previous balance by the monthly periodic rate expressed as a decimal.

The previous balance is given to be $1,026.61. As a decimal, the monthly periodic rate is

1.75% = .

Use these values to find the finance charge, rounding the result to the nearest cent.

finance charge	=	previous month's balance ✕ monthly periodic rate
	=	1,026.61 ✕
	=	$

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