orine has a revolving credit account at an annual percentage

orine has a revolving credit account at an annual percentage rate of 24%. Her previous monthly balance is $549.79. Find the new balance using the previous month\'s balance method if Lorine\'s account showed the following activity: Payment, $143.30; Country Lumber (charge), $230.18; Zahir Antiques (credit), $398.05; Mountain Vineyards (charge), 204.94; Bart\'s Garage (charge), $214.21.

Solution

annual percentage rate = 24%

monthly percentage rate = 24%/12=2%=0.02

previous monthly balance = $549.79

Finance charge = Previous month’s balance x Periodic rate =549.79*0.02 =10.9958

Payment+credits = $143.30+$398.05= 541.35

Purchases and Cash advances =$230.18+$204.94+$214.21 =649.33

so new balance is given by

New Balance = Previous balance + Finance Charge + Purchases and Cash advances - Payments

New Balance = 549.79 + 10.9958 + 649.33 - 541.35 = $668.7658