DEPARTMENT OF TECHNICAL

EDUCATIONANDHRAPRADESH
Name : N. USHA RANI
Designation : Lecturer
Branch : Commercial & Computer
Practice (CCP)
Institute : GPW/Guntur
Year/Sem : III Sem
Sub-Code : CCP-302
Subject : ACCOUNTANCY-II
Topic : AVERAGE DUE DATE
Duration : 50 minutes
Sub Topic : Problems on A.D.D
Teaching Aids : PPT ANIMATIONS
Objectives:
At the end of this period, you will be able to:
 Understand how to calculate interest from the due

date to the date of payment.

CCP302.10 2
Recap Of Meaning

 So far you learnt the meaning, procedure and

formula for calculating Average Due Date.

Average due date determines the day on which

various Amounts can be settled without loss or gain
to either party.

CCP302.10 3
Calculation of Interest by Average Due Date
Method

CCP302.10 4
Calculation of Interest is made:

 When the total sum not paid on the Average Due

Date, but on a Subsequent date
 The interest is calculated on the total sum from
Average Due Date to the date of settlement

CCP302.10 5
Example(1) :
Lokesh owes Rs. 2000 to Lakshman on 1st Jan, 2000.
The following transactions take place between them.
 Jan 16 Lokesh buys goods Rs. 2,200

 Feb 2 Lokesh receives cash Rs. 2,000

 Mar 5 Lokesh purchases goods Rs. 1,500

Lokesh pays the whole amount on 31st March together

With interest @ 10% per annum. Find out Interest?
Hint: 2000 is Leap Year

CCP302.10 6
Solution:
(Taken Jan 1st as Base date)

Starting Due Amount No. of Days Product

point Date Rs. (from Jan1) Rs.
Jan 1 Jan 1 2,000 0 0
Jan 1 Jan 2,200 15 33,000
16
Jan 1 Feb 2 2,000 32 64,000
Jan 1 Mar 5 1,500 64 96,000
7,700 1,93,000

CCP302.10 7
Average Due Date = Base Date + Product
Amount
= Jan 1st + 193000
7700

= 25.06 or 25 days

= Jan 1st + 25 days

= Jan 26, 2000

CCP302.10 8
 Calculation of Interest :
 Interest is calculated from the Average Due Date to the
Date of settlement
 Average Due Date Jan 26th

 Date of settlement is March 31st

 Interest therefore is calculated on Rs. 7700/- for 65 days

@ 10% p.a
Interest = 7700 x 65 x 10 = Rs. 13.80/-
366 x 100

CCP302.10 9
(1) Lakshmikanth a partner in a firm has drawn the
Following amount during the half year ending 30th
June,1973 for his use.
 14th Jan Rs. 100
 18th Feb Rs. 60
 21st Mar Rs. 112
 16th Apr Rs. 100
 20th May Rs. 88
 23rd June Rs. 100

He is to be charged at 10% interest p.a on the total

amount at the Average Due Date. Find out Interest.

CCP302.10 10
(1) A Partner has withdrawn the following sums
from the business for his personal use during the
half-year ending 30th June, 1973.
Rs.
 22nd January 500
 31st January 200
 18th February 100
 9th March 150
 4th May 400
 30th June 1000
Find out Average Due Date and Calculate interest
@ 5%

CCP302.10 11
• Rs. 15000 lent by Shivraj to Rao & Co. on 1st
Jan, 1984 is repayable into equal annual
installments commencing from 1st January
1986.

Calculate Average Due Date and interest at 15% p.a.

CCP302.10 12
(1) A partner has been drawing Rs.600 at the end of
each month from January to December for
private expenses. According to Partnership Deed
interest is charged on drawings @ 10% p.a.
Calculate the interest.

CCP302.10 13
Summary

So far we have discussed

 The importance of calculation of interest in
Average Due Date, by solving some problems

CCP302.10 14
Quiz
1. Interest is calculated on the total sum from the
Average Due Date to the date of settlement.

(a) Correct
(b) Not Correct
(c) None of the Above

CCP302.10 15
(2) Interest is calculated up to the date of settlement.

(a) Yes

(b) No

CCP302.10 16
Frequently Asked Questions

(1) What is the process of calculating interest in

Average Due Date?

CCP302.10 17