Professional Documents
Culture Documents
February 4 , 2013
Disclaimer Statement
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The content of this video lecture has not been specifically discussed
by the Council of the Institute or any of its Committees and the views
expressed herein may not be taken to necessarily represent the views
of the Council or any of its committees
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Important Notes
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Learning Objectives
Average
Due Date
Account
Current
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Introduction
Also Called Zero Interest Date
Computing Average Due Date
Important Points For Noting
Practical Exam Problems
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Case I
Amount Lent
in One
Installment
Re-Payment
in Multiple
Installments
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Case II
Amount Lent
in Multiple
Installments
Repayment in
One
Installment
+
No. of Installment
Note:
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Case II - Continued
3. Multiply the number of days from base date by
its respective amount
4. Add up the amounts and products
5. Divide the total of the products by the total of the
amount and get the result approximately up to a
whole number.(e.g. 7.4 days are equal to 7days
and 7.52 days are equal to 8 days.)
6. Add the number of days calculated above to the
Base date and the result will be the average due
date
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Payment Dates
If payment is made on the average due date, it
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interest is payable
In this case the base date of sale and purchase
transaction should be taken as same
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Days from
Base Date
Amount
(Rs.)
Product
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Illustration 1
Comprehensive Problem
May 2008 4 Marks
Case Type I: One Payment, Multiple Equal Repayments
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Problem Statement
Mr A advanced Rs 30,000/- to Mr B on 1.4.2008.
The amount is repayable in 6 equal monthly
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Solution 1
Average Due Date
=1.4.2008 + 1+2+3+4+5+6
6
=1.4.2008+3.5 months
=16 July 2008
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Illustration 2
Comprehensive Problem
Nov 2002 4 Marks
Case Type I: One Payment, Multiple Equal Repayments
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Problem Statement
Mr A lent 25,000 to Mr B on 1 Jan 2000.
The amount is repayble in 5 half yearly
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Solution 2
Calculation of sum of period from date of each
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Solution 2:Continued
Average Due Date=
Date of loan + Sum of months from 1 Jan 2000 to
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Solution 2:Continued
Interest=25000*10/100*2
=Rs 5000
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Illustration 3
Comprehensive Problem
Case Type II: Multiple Payments, One Repayment
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Problem Statement
Calculate Average due date from the following
information
Date of the bill
Term
Amount
16th August, 2010
3 months 3,000
20th October, 2010
60 days
2.500
14th December, 2010
2 months 2,000
24th January, 2011
60 days
1,000
06th March, 2011
2 months 1,500
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Solution 3
Bill Date
Amount
Term
Due
Date(Inclu
ding grace)
16 Aug 10
3000
3 Months
19 Nov
20 Oct 10
2500
60 Days
22 Dec
33
82500
14 Dec 10
2000
2 Months
17 Feb
90
180000
24 Jan 11
1000
60 Days
28 Mar
129
129000
6 Mar 11
1500
2 Months
9 May
172
258000
10000
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649500
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Solution 3:Continued
Average due date = Base date +
= 649500/10000
= 19 Nov. 10 + 65 Days (approx)
= 23, Jan, 11
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Illustration 4
Comprehensive Problem
May 1999 4 Marks
Case Type II: Multiple Payments, One Repayment
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Problem Statement
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Solution 4
Calculation of Average Due Date
Taking 6th January, 2011 as the base date
For Greens payments
Due Date
Amount
6 January
6000
2 Febuary
2800
27
75600
31 March
2000
84
168000
10800
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243600
Solution 4:Continued
For Reds payments
Due Date
Amount
6 January
6600
9 March
2400
62
148800
20 March
500
73
36500
9500
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185300
Solution 4:Continued
Average Due Date =
Base Date + Difference in Total Product
10,800 9,500
=6 Jan + 58,300/1,300
=6 Jan + 45 days (approx.)
=20 Feb 2011
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Illustration 5
Comprehensive Problem
May 2000
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Problem Statement
E owes to F the following amounts:
(i)Rs. 5,000 due on 10th March, 2011
(ii)Rs. 18,000 due on 2nd April, 2011
(iii)Rs. 60,000 due on 30th April, 2011
(iv) Rs. 2,000 due on 10th June, 2011
He desires to make full payments on 30th
June 2011 with interests at 10% per annum
from the average due date. Find out the
average due date and interest.
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Solution 5
Calculation of Average Due Date
Taking 10th March, 2011 as the base date
Due Date
For Es payments
Amount
No. of Day from Product
the Base date
10 March
5000
2 April
18000
23
414000
30 April
60000
51
3060000
10 June
2000
92
184000
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85000
3658000
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Solution 5 Continued
Average Due Date
=Base date +
Sum of Product
Sum of amounts
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3658000
85000
Solution 5 Continued
Computation of Interest:
Interest to be calculated on Rs. 85,000 from
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Illustration 6
Comprehensive Problem
November 2010
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Problem Statement
From the following details find out the average
due date
Date of Bill
29 Jan 2009
20 March 2009
12 July 2009
10 August 2009
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Amount
5000
Term of bill
1 Month
4000
2 Months
7000
1 Month
6000
2 Months
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Solution 6
Date
Term
Due date
Amount
5000
29 Jan
1 Month
3 Mar
20 Mar
2 Month
23 May
12 Jul
1 Month
10 Aug
2 Month
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Days from
base date
Product
4000
81
324000
14 Aug
7000
164
1148000
13 Oct
6000
224
22000
1344000
2816000
Solution 6 Continued
Average due date=Base date + Sum of
Product/Sum of amounts
=3 March + 2816000/22000
=3 March + 128 days
=9 July
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Account Current
Paper 1: Accounting Chapter 7 Unit II
An Intro.
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items
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Form/ Presentation of
Account Current?
Form of an Account
Copy of ledger account of the other party in the
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Account Current
Interest Computation Methods
An Intro.
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Account Current
Interest Computation Methods
Commonly Used
Ordinary Method
Product Method
Others
poque Method
Daily Interest Method
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Ordinary Method
Each item is taken separately and the number of
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Product Method
Instead of calculating interest separately each
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poque Method
In this days are calculated from date of opening
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Books of A
B in Account Current with A
Date
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Particu
lars
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Amount
(Rs.)
Day
s
Product
Date
Particu
lars
Amount
(Rs.)
Days
Product
Calculation of
Days for
computing interest
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Calculation of
Interest
Where the account current is started with the previous balance. Both opening date
and the last date of the period are included in the number of days.
When nothing has been mentioned, the date of transaction should be taken as the
due date.
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Important Note 1
In Account current, where the rate of interest differs in
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Important Note 2
In the case of sale or purchase transaction, if any
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Illustration 1
Comprehensive Problem
PCC May 2005 (8 Marks)
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Problem Statement
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July 1
Rs 1350
July 5
Rs 900
July 15
Rs 1350
August 4
Rs 1920
August 15
Rs 900
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Sept 1
Rs 2100
Sept 1
Rs 750
Sept 12
Rs 960
Sept 15
Rs 600
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Solution 1
Books of Raghav
Barun in account current with Raghav
Interest at 5% p.a upto 30 September 2010
Date
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Particulars
Amount
Days
Product
July 1
To balance
Rs 1350
92
124200
July 5
To Sales
Rs 900
87
78300
August 4
To Sales
Rs 1920
57
109440
Sept 1
To Cash
Rs 750
29
21750
Sept 12
To Sales
Rs 960
18
17280
Sept 15
To Cash
Rs 600
15
9000
Sept 30
To Interest
Rs 21
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6501
359970
Solution 1 Continued
Books of Raghav
Barun in account current with Raghav
Interest at 5% p.a upto 30 September 2010
Date
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Particulars
Amount
Days
Product
July 15
By Cash
Rs 1350
77
103950
Aug 15
By Cash
Rs 900
46
41400
Sept 1
By Purchase
Rs 2100
29
60900
Sept 30
By Balance c/d
Rs 2151
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6501
153720
359970
Illustration 2
Comprehensive Problem
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Problem Statement
Mr A owed 4000 on 1st January 04 to Mr X. The following
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Solution 2
Mr A in account current with Mr X
Interest at 10% p.a upto 15 March 04
Date
2004
Particulars
Jan 1
To Balance b/d
Jan15
Sales
Mar13
Red Ink
Product
Mar15
To Interest
Rs
4000
2230
Days
Product
75
300000
60
Date
2004
Jan29
133800
Feb10
58000
Mar13
110
Mar15
Particulars
By Purchase
Cash
Bills
Receivable(Due
date 13 April)
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491800
Days
Product
1200
46
55200
34
34000
1000
2000
402600
Balance of
product
Balance c/d
6340
Rs
2140
6340
491800
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Illustration 3
Comprehensive Problem
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Problem Statement
On 2nd January 2012. Vinod opened a current account with AB
Bank with Rs 30,000 and deposited the following amounts:
15th January
Rs. 12,000
12th March
Rs. 8,000
10th May
Rs. 16,000
His withdrawals were as follows:
15th February
Rs. 26,000
10th April
Rs. 30,000
15th June
Rs. 14,000
Show Vinods A/c in the ledger of the AB Bank. Interest is to be
calculated at 5% on the debit and 2% on credit balance. The
account is to be prepared as on 30th June. 2012
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Solution 3
Date
Particulars
Jan 2
Cr
Balance
By cash A/c
30,000
30000
13
390000
Jan 15
By cash A/c
12,000
42000
31
1302000
Feb 15
To Self
16000
25
400000
Mar 12
By cash A/c
24000
29
696000
Apr 10
To Self
6000
30
May10
By cash A/c
10000
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Jun15
To Self
4000
15
Jun30
By Interest
140
Jun30
By Balance c/d
3,860
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Dr
26,000
8,000
30,000
16,000
14,000
70000
70000
Days
Dr
Product
Cr
Product
180000
360000
60000
3860
240000
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3148000
Illustration 4
Comprehensive Practical Problem
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Problem Statement
From the information given below, prepare an account current to be
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August 2,
October 25,
November 2,
November 30,
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900
1,500
300
1,000
Solution 4
Shyam in account current with Ram
Interest to 31 December 2011 at 10% p.a
Date
2011
Particulars
Days
Intere
st
2 Aug
To Sales
151
37.25
10 Oct
To Sales due
date 10 Nov
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30 Nov
To cash
31 Dec
To Interest
(Contra)
31
8.5
Amt
Date
2011
Inter
est
By Cash
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27.5
2 Nov
By Return
Inward
59
31 Dec
By balanceInterest(Contra)
2000
25 Oct
By Bank
4.87
73.75
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3925
1500
300
25
1675
Balance c/d
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Amount
16.38 450
2 Aug
25
Days
133
900
1000
Particulars
73.75
3925
Thank You
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