Account Statements pp. 258-2607-1SECTIONSECTION

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Section ObjectiveSection ObjectiveCalculate:

• new balance on a charge account

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credit card (p. 258)

A card that allows the cardholder to purchase goods and services on demand by presenting it.

charge account (p. 258)

An existing line of credit, often at a particular business.

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account statement (p.258)

A bank statement that shows all deposits, withdrawals, and interest credited to an account.

finance charge (p. 258)

Interest that is charged to a credit account if the account holder does not pay on time.

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New Balance =

Previous + Finance + New – (Payments + Credits)Balance Charge Purchases

Formula Formula

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A Financial Gem? p. 258A Financial Gem? p. 258

What are the disadvantages of using credit cards?

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See Figure 7.1 on page 259 of your textbook.

Martha Palmer received this charge account statement on October 2.

What is her new balance?

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Step: Find the new balance.

Previous + Finance + New – (Payments + Credits)Balance Charge Purchases

$332.64 + $5.64 + $173.03 – ($50.00 + $31.94) =

$511.31 – $81.94 = $429.37

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Dante Green’s charge account statement showed a previous balance of $157.80, a finance charge of $2.76, new purchases of $86.50 and $48.50, a payment of $40.00, and a credit of $37.85.

What is the new balance?

Example 2Example 2

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Step: Find the new balance.

Previous + Finance + New – (Payments + Credits)

Balance Charge Purchases

$157.80 + $2.76 + ($86.50 + $48.50) – ($40.00 + $37.85)

$295.56 – $77.85 = $217.71

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Malcolm Turner’s charge account statement showed:

•a previous balance of $270.49•a finance charge of $4.05•new purchases of $44.62•a payment of $225.00

What is the new balance?

Practice 1Practice 1

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$94.16

Practice 1 AnswerPractice 1 Answer

Account Statements7-1END OF SECTIONEND OF SECTION