Deposits and purchases:
| Day | Debit ($) | Credit ($) |
| --------- | --------- | ---------- |
| Monday | 194.62 | 35.45 |
| Tuesday | - | 11.20 |
| Wednesday | 145.86 | 24.75 |
| Thursday | 53.35 | 33.80 |
| Friday | 31.60 | 45.77 |
| Saturday | 12.90 | 61.63 |
Anna gets an overdraft fee if her balance at the end of the day is negative. On which day or days does Anna get charged an overdraft fee?
I. Wednesday
II. Thursday
III. Friday
A. I only
B. I and II
C. II and III
D. III only
Answer (1)
Calculate Anna's balance after Monday: B a l an c e M o n d a y = 0 + 35.45 − 194.62 = − 159.17 .
Calculate Anna's balance after Tuesday: B a l an c e T u es d a y = − 159.17 + 11.20 = − 147.97 .
Calculate Anna's balance after Wednesday: B a l an c e W e d n es d a y = − 147.97 + 24.75 − 145.86 = − 269.08 . Anna gets an overdraft fee.
Calculate Anna's balance after Thursday: B a l an c e T h u rs d a y = − 269.08 + 33.80 − 53.35 = − 288.63 . Anna gets an overdraft fee.
Calculate Anna's balance after Friday: B a l an c e F r i d a y = − 288.63 + 45.77 − 31.60 = − 274.46 . Anna gets an overdraft fee.
Anna gets overdraft fees on Wednesday, Thursday, and Friday. The answer is (c). c
Explanation
Initial Analysis Let's analyze Anna's bank balance day by day to determine when she incurs an overdraft fee. We'll start with an initial balance of $0 and track the changes based on her debits (purchases) and credits (deposits). An overdraft fee occurs if her balance goes negative at the end of the day.
Monday's Balance First, let's calculate the balance after Monday. Anna's balance changes by her credits minus her debits, so: B a l an c e M o n d a y = 0 + 35.45 − 194.62 = − 159.17 Anna's balance on Monday is -$159.17.
Tuesday's Balance Next, we calculate the balance after Tuesday: B a l an c e T u es d a y = − 159.17 + 11.20 − 0 = − 147.97 Anna's balance on Tuesday is -$147.97.
Wednesday's Balance and Overdraft Now, let's calculate the balance after Wednesday: B a l an c e W e d n es d a y = − 147.97 + 24.75 − 145.86 = − 269.08 Anna's balance on Wednesday is -$269.08. Since this is negative, she gets an overdraft fee on Wednesday.
Thursday's Balance and Overdraft Let's calculate the balance after Thursday: B a l an c e T h u rs d a y = − 269.08 + 33.80 − 53.35 = − 288.63 Anna's balance on Thursday is -$288.63. Since this is negative, she gets an overdraft fee on Thursday.
Friday's Balance and Overdraft Now, let's calculate the balance after Friday: B a l an c e F r i d a y = − 288.63 + 45.77 − 31.60 = − 274.46 Anna's balance on Friday is -$274.46. Since this is negative, she gets an overdraft fee on Friday.
Conclusion Anna gets charged an overdraft fee on Wednesday, Thursday, and Friday. Therefore, the correct answer is that she gets charged an overdraft fee on days I, II, and III.
Examples
Understanding bank balances and overdraft fees is crucial in personal finance. For instance, if you're managing a small business, tracking daily transactions and ensuring a positive balance can prevent unnecessary fees and maintain a healthy financial standing. This problem demonstrates the importance of monitoring income and expenses to avoid overdrafts, which can be applied to budgeting and financial planning in everyday life.
