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Delhi

Average Due Date And Current Account

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Published in: Accounts
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Notes On Average Due Date and Current Account.

CA H / Mumbai

year of teaching experience

Qualification:

Teaches: CA - CPT, CA - Final, CA - IPCC, CS - Foundation

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  1. CA hub In case of Ordinary Transactions HOW TO FIND DUE DATE In Case of Bills / promissory notes l. AVERAGE DUE DATE In Case Of Holidays Given in days Added to days Months Added to months Years Directly added to years After date bill From the date of drawing 3 Grace days will be added After sight bill From the date of acceptance 3 Grace day will be added Demap&bill / On presentment / On sight bill Np@édit period No grace days ubli olidays st 2 Jan, 1 April th 1 5 Aug pq9ep All Såndays a any othettlolidays eclared b/ the o in official zette Preceding day Emergency holidays Succeeding working day (Next date) If corresponding date not available last date of month How! calculate AD AVERAGE DUE DATE How to calculate interest using ADD In case of loans AD In ase 9tone way ransaction total products BD + total amount Ocase of two way transactions (Contra entries) diff.inproducts diff.in amounts Base date must be same for both tables preferably earliest due date In case of normal transactions Saving of interest Amount Payment of interest Amount Interest to be calculated from the date of loan given Base date canbe an preferably earliest due date Either Calculate date of settlement or Calculate settlement amount. For Problematic Purpose 1. 2. Working Statement of Average Due Date Due date of transactions/bills/ promissory notes No of Days away from base date Total Amount xxx In case of Drawings by partner Interest to be calculated up to closing of books of accounts Base Date: Product xxx While calculating no of Days either starting date or ending date to be ignored If the resulting figure is fractions ( total products/ total amounts = fraction)
  2. 3. 4. 5. 6. Fraction of years should be converted into No. of months by multiplying with 12 Fraction of months should be converted in to No. of days by multiplying with No.of days in the respective months i.e, 28/29/30/31 Fraction of days should be rounded off to nearest day Calculation of the average due date when amount is lent in one installment and repayment is to be made in equal installment. Sum of days / months / years from the date of lending to the date of repayment of each installment Average Due Date = Date of loan No. of installments Notes: i) The above formula is applicable only if repayment is made on in equa nstallmentamounts ) If the amounts are different, use products only. For theory (Questions asked in previous 10 Years) 1. 2. A promissory note executed by Mr. X is due on 12.8.2007. Wha •s the ma urity date o the promissory note including grace days? M07 - 2 M) (PCC) Answer: Where the promissory note is due (including grace days o ublic holida the preceding day shall be the due date. Hence, the due date is 14.8.2007. Define Average Due Date. List out th various •ns ance whe verage ue Date can be used. For answer refer theory in the chapter ormal Busine equal fo Interest tables metho w ere interest rates are th debit and credits (IPCC M14 - 4M) 2. ACCOUNT CURRENT Methods Banking Business / where interest rates are different for debits and credit Products of Balance Products method Forward method Backward method/ époque method STEPS 2. 3. 4. PARTICULARS Name Additional columns in normal ledger accounts Recording of transactions Identification of Due Date INTEREST TABLE FORWARD METHOD BACKWARD METHOD Receiver in account current with supplier (from ) rate of interest to Due date, no. of days, interest amount / products As usual of normal ledger posting As usual done in ADD chapter CA JUJAR SINGH RATHORE *9867414390
  3. CA HUB 5. 6. 7. 8. No. of Days Products of Closing balance How to calculate Interest Where to Post Interest Due Date to closing date Due Date to closing date Earliest due date to DD In case of opening balance both days to be included For all other cases either opening date or closing date to be ignored Closing bal x no.of days (total period of account current) (only post in to product column) where the amount is less (debit interest is to be calculated Opposite Balance of products x rate of interest / 100 x 1/365 r 366 side or credit side) Products = No. of days x amt one day interest to be calculated oppo Side amount column to to s colu balance of interest column side amount c balance f pro ide amount balance of ducts Format of account current (in case of normal business transactions where rate of Interest is same on debit and credit products Amt Due Date Particulars (Rs.) of Date Days Interest/ Date Products Amt ticulars ( Due of Date Days Interest/ products Products of Balance (periodic Balance Method)-ln case of Banks (or) where rate of interest is different on debit and credit products Date Particular Withdrawal (or) Deposit (or) credits lance Balance Dr.(or) Cr. Number of Days Product Dr Cr 1. 2. 3. 4. Record the transactions a p ronologica o der No o day p to last tr nsaction- transaction Date to next transaction Date. - 01 ast transaction — the at of transaction as well as the date up to which the account current is pre ared is included both da re inclusive). a eulate debit products Credi products according to Balance Ca u ate interest for eblts & credits products, enter the amount of interest as deposit/withdrawal as appro riate Red ink Interest Such interest is also called as negative interest In case due date of a transaction falls after the date of account current. Interest should be deducted. However interest from the date of closing to such date is written in 'Red ink' in the appropriate side of the account current, or it may be shown in the opposite side interest/ products column in the normal ink. Red ink means, the amount to be deducted. CA JUJAR SINGH RATHORE *9867414390

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