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Day on the current balance

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Reference no: EM131086785

Jenny has a bank account on which simple interest is earned at 1¼% per annum on credit balances (Cr). The bank charges simple interest at 10% per annum on debit balances (Dr). Interest is calculated at the start of each day on the current balance at a daily rate of interest that is 1/365 of the annual rate, and charged/earned at the end of the month.

The account for August is shown below.

Date                        Details                       Debit                         Credit                                     Balance

                                                               £                                £                                             £

31 July                     Balance c/f                                                                                               3,303.66 Cr

2 Aug                     Cheque                   1,450.00                                                                    1,853.66 Cr

19 Aug                   Cheque                    2,105.00                                                                     251.34 Dr

28 Aug                  Deposit                                                          2,629.87                                2,378.53 Cr

The balance at the end of August (length 31 days), before interest and charges, is £2,378.53 in Credit.

(a) Calculate:

(i) the interest earned for the first two days of August

(ii) the interest paid for the period 20 August to 28 August

(iii) the interest payable to, or by, Miss Cook on 31 August.

The bank charges £35 for a letter to her telling her that she is more than £100 overdrawn.

(b) Calculate the final balance figure.

Reference no: EM131086785

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