Randy Ice starts the month with a balance on his credit card of $1000. On the 10th day of the month, he purchases $200 in clothes with his credit card. On the 15th day of the month makes a payment on his credit card of $500. There is no other activity until the 30th day of the month. Randy's interest rate is one and a half percent for the month. His bank calculates the finance charge on their credit card by using the average daily balance including new purchases. What would his finance charges be for the month? a) ¢10 0

Randy Ice starts the month with a balance on his credit card of $1000. On the 10th day of the month, he purchases $200 in clothes with his credit card. On the 15th day of the month makes a payment on his credit card of $500. There is no other activity until the 30th day of the month. Randy's interest rate is one and a half percent for the month. His bank calculates the finance charge on their credit card by using the average daily balance including new purchases. What would his finance charges be for the month? a) ¢10 0

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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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Randy Ice starts the month with a balance on his credit card of $1000. On the 10th day of the month, he
purchases $200 in clothes with his credit card. On the 15th day of the month makes a payment on his credit
card of $500. There is no other activity until the 30th day of the month Randy's interest rate is one and a half
percent for the month. His bank calculates the finance charge on their credit card by using the average daily
balance including new purchases. What would his finance charges be for the month?
O a) $18.00
O b) $11.25
c) $7.50
d) $15.00
O e) $13.25

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