Question

Jessica’s credit card is on a 30-day billing cycle, and it computes finance charges using the adjusted balance method. The following table details Jessica’s use of her credit card in the month of October.

Date
Amount ($)
Transaction
10/1
1,240.55
Beginning balance
10/2
36.43
Purchase
10/10
75.00
Payment
10/13
131.79
Payment
10/20
41.52
Purchase
10/22
25.00
Purchase

What is Jessica’s adjusted balance for October?
a.
$1,136.71
b.
$1,033.76
c.
$1,140.55
d.
$1,240.55

Answer 1

Answer: b. $1,033.76

Calculation: Adjusted balance = beginning balance − payments and credits
= $1,240.55 − ($75.00 + $131.79) = $1,240.55 − $206.79 = $1,033.76

(Under the adjusted-balance method, purchases during the cycle are not subtracted when computing the adjusted balance.)