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Copyright © Glencoe/McGraw-Hill MBA, Section 7-1, Slide 2 of 13
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Section ObjectiveSection ObjectiveCalculate:
• new balance on a charge account
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Copyright © Glencoe/McGraw-Hill MBA, Section 7-1, Slide 3 of 13
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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.
Key Words to KnowKey Words to Know
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Copyright © Glencoe/McGraw-Hill MBA, Section 7-1, Slide 4 of 13
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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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Copyright © Glencoe/McGraw-Hill MBA, Section 7-1, Slide 5 of 13
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New Balance =
Previous + Finance + New – (Payments + Credits)Balance Charge Purchases
Formula Formula
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Copyright © Glencoe/McGraw-Hill MBA, Section 7-1, Slide 6 of 13
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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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Copyright © Glencoe/McGraw-Hill MBA, Section 7-1, Slide 7 of 13
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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?
Example 1Example 1
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Copyright © Glencoe/McGraw-Hill MBA, Section 7-1, Slide 8 of 13
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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
Example 1 AnswerExample 1 Answer
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Copyright © Glencoe/McGraw-Hill MBA, Section 7-1, Slide 9 of 13
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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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Copyright © Glencoe/McGraw-Hill MBA, Section 7-1, Slide 10 of 13
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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
Example 2 AnswerExample 2 Answer
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Copyright © Glencoe/McGraw-Hill MBA, Section 7-1, Slide 11 of 13
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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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Copyright © Glencoe/McGraw-Hill MBA, Section 7-1, Slide 12 of 13
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$94.16
Practice 1 AnswerPractice 1 Answer