Question

On March 1, 2020, Mike Dials purchased a suit at Crane's Fine Apparel Store. The suit cost $950 and Mike used his Crane credit card. Crane charges 2% per month interest if payment on credit charges is not made within 30 days. On April 30, 2020, Mike had not yet made his payment. What entry should Crane make on April 30th?

Answer 1

Answer:

The entry amount made by Crane=$988

Explanation:

Step 1

Determine the interest charged due to the delay using the expression below;

Interest=principal×rate×time

where;

principal=$950

rate=2%=2/100=0.02

time=2 months

replacing;

Interest=(950×0.02×2)=$38

The interest charged by April 30, 2020=$38

Step 2

Calculate total amount of payment

The total amount=Principal amount+interest

where;

principal=$950

interest=$38

replacing;

Total amount of payment=(950+38)=$988

The entry amount made by Crane=$988