Solve the Problem The Interest Rate on the Card Is 1

question 77

Multiple Choice

Solve the problem.
-On the January 25 billing date, Vivian had a balance due of $375.46 on her credit card. The Transactions during the following month were: $\begin{array}{lll}\text { January } 26 & \text { Charge : curtains } & \$ 378 \\\text { January } 27 & \text { Payment } & \$ 110.45 \\\text { February } 16 &\text { Charge: tires } & \$ 207.08\end{array}$

The interest rate on the card is 1.2% per month. Using the average daily balance method, find the Finance charge on February 25 (January has 31 days) .

• A) $8.32
• B) $2.08
• C) $8.42
• D) $8.38

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Definitions:

Revenue Recognition Principle

An accounting principle that outlines the specific conditions under which revenue is recognized.

Unearned Rent Revenue

Income received by a company for rent that has not yet been earned because the service period has not occurred.

Unearned Service Revenue

Income received by a company for services yet to be performed; considered a liability until the service is delivered.