1 / 5

7.2 – Finance Charge – Unpaid Balance Method

7.2 – Finance Charge – Unpaid Balance Method. Definition & Formulas. unpaid-balance method (p. 261) Computing the finance charge on a credit account based on the portion of the previous balance that has not been paid. Unpaid Balance = Previous Balance – (Payments + Credits)

laurel-morales
Download Presentation

7.2 – Finance Charge – Unpaid Balance Method

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. 7.2 – Finance Charge – Unpaid Balance Method

  2. Definition & Formulas unpaid-balance method (p. 261) Computing the finance charge on a credit account based on the portion of the previous balance that has not been paid. Unpaid Balance = Previous Balance – (Payments + Credits) Finance Charge = Unpaid Balance ×Periodic Rate New Balance = Unpaid Balance + Finance Charge + New Purchases

  3. Example • Jack has a charge account which uses the unpaid-balance method for finance charges. The periodic rate is 1.85 percent. If his previous balance is $478.68, he had payments and credits of $250.00 and he has new purchases of $38.50, find his new balance.

  4. Solution • Step One: Find the unpaid balance Unpaid Balance = Previous Balance – (Payments + Credits) • Previous Balance = 478.68 • Payments & Credits = $250.00 • Unpaid Balance = 478.68 – 250.00 • Unpaid Balance = $228.68 • Step Two: Find the Finance Charge Finance Charge = Unpaid Balance ×Periodic Rate • $228.68 x .0185 = $4.23 • Step Three – Find the new balance New Balance = Unpaid Balance + Finance Charge + New Purchases • New Balance = 228.68 + 4.23 + 38.50 • New Balance = $271.41

  5. Assignment • P. 262-263 1-26all

More Related