A credit card account had a balance of $968 on May 5. A purchase of $295 was made on May 17, and a payment of $100 was made on May 20. The interest on the average daily balance is 1.7% per month. Find the average daily balance on the June 5 bill

Answer 1

To find the average daily balance on the June 5 bill, we need to calculate the sum of the daily balances for the period from May 5 to June 4, and divide it by the number of days in that period.

First, we need to determine the number of days for each transaction:
- From May 5 to May 16 (inclusive), there are 12 days.
- On May 17, a purchase of $295 was made, meaning that this amount will be added to the balance for 19 days.
- On May 20, a payment of $100 was made, meaning that this amount will be deducted from the balance for 22 days.
- From May 21 to June 4 (inclusive), there are 15 days.

Next, we calculate the daily balances for each period:
- From May 5 to May 16: $968 for 12 days = $11,616
- May 17: ($968 + $295) for 19 days = $13,813
- May 18 to May 19: ($968 + $295) for 2 days = $2,526
- May 20: ($968 + $295 - $100) for 3 days = $2,811
- May 21 to June 4: ($968 - $100) for 15 days = $13,020

Now we can calculate the total balance for the period:
Total balance = $11,616 + $13,813 + $2,526 + $2,811 + $13,020 = $43,786

Finally, we divide the total balance by the number of days in the period:
Average daily balance = $43,786 / 61 days

Therefore, the average daily balance on the June 5 bill is approximately $718.46.