Question

Gudenas Company makes a credit card sale to a customer for $500. The credit card sale has a grace period of 30 days and then an interest charge of 18% per year or 1.5% per month is added to the balance. If the unpaid balance on the above sale is $300 at the end of the grace period, the interest charge is:

A. $5.00.
B. $4.50.
C. $7.50.
D. $3.00.

Answer 1

Answer:

Interest charge after grace period = $4.50

Explanation:

Given:

Total credit sales = $500

Grace period = 30 days

Interest charge = 1.5 % after grace period per month

Total unpaid balance after grace period = $300

Computation of interest charge after grace period:

$Interest\ charge\ after\ grace\ period=unpaid\ balance\ after\ grace\ period \times Interest\ rate$

Interest charge after grace period = $300 × 1.5%

Interest charge after grace period = $4.50