Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Net Accounts Receivable: Allowance for Doubtful Accounts

Financial Accounting

7. Receivables and Investments

Net Accounts Receivable: Allowance for Doubtful Accounts

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Multiple Choice

If Kelly's credit card statement shows a total balance of $1,200, a minimum payment due of $40, and a payment due date of June 15, what is the minimum amount Kelly must pay by the due date to avoid paying any interest?

$40 (the minimum payment due)

$0 (no payment is necessary)

$1,200 (the full statement balance)

$600 (half of the statement balance)

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Verified step by step guidance

Understand the problem: Kelly's credit card statement shows a total balance of $1,200, a minimum payment due of $40, and a payment due date of June 15. The goal is to determine the minimum amount Kelly must pay by the due date to avoid paying any interest.

Review the concept of credit card interest: Interest is typically charged on the remaining balance after the payment due date unless the full statement balance is paid. Paying only the minimum payment ($40) or any partial amount less than the full balance ($1,200) will result in interest charges on the remaining balance.

Identify the key requirement: To avoid paying any interest, Kelly must pay the full statement balance of $1,200 by the payment due date (June 15). This is because paying the full balance ensures no remaining balance is carried forward to the next billing cycle.

Clarify the options provided: The minimum payment ($40) is the least amount Kelly can pay to avoid late fees, but it will not prevent interest charges. Paying $0 will result in late fees and interest. Paying $600 (half the balance) will reduce the balance but still incur interest on the remaining $600. Only paying $1,200 (the full balance) avoids interest entirely.

Conclude the solution: Kelly must pay the full statement balance of $1,200 by June 15 to avoid paying any interest. This aligns with the principle of avoiding interest by clearing the entire balance within the grace period.