Account Current and
Average Due Date
Course Instructor: Mr Gulam Ali Solangi
Presentate by: Yasmeen Hussain (BBA PART-I)
Introduction to Account Current
• It is an account of recording the transactions between two parties in
a given period of time and in which interest is charged and allowed
at an agreed rate on each item.
Situations to prepare Account Current
• Frequent transactions regularly takes place between two parties.
• Manufacturer to merchant
• Banker to customer
Purpose
• Carrying out day to day business transactions.
• The main purpose of this account is to enable the account holder
to run his business smoothly as there is no limit on number of
transactions
Methods of preparation
1. By Interest table
2. By Product
• By Periodic balance method
Red ink interest
• If the due date of transaction falls after the period of closing
account, the number of days from closing of the period to the due
date of that transaction should be written in red ink interest.
• This is because the interest on the amount of that transaction is to
included on the opposite side of account.
Preparation of interest table
• From the following particulars make up an Account Current to be
rendered B to A on 30th June, 2020, calculating interest by months
at the rate of 5 percent.
2020
On 1st January Balance due to “B” RS. 4,000.
On 1st March Cash received from “A” RS. 900.
On 1st April “A” purchased goods from “B” RS. 2,400.
On 28th April “A” gives his acceptance to “B” at three months for
Rs. 2,400.
“A” in Account Current with “B” on 30th June, 2020
Date
Particulars Months Interest
2020
Principal
Date
Rs
Rs.
2020
Particulars Months Interest
Principal
Rs.
Rs.
Jan.1
To balance
b/d
6
100
4,000
March 1
By cash
4
15
900
April 1
To sales
3
30
2,400
April 28
By B/R due 1
31st June
10
2,400
June
30
To red ink
interest
June 30
By balance
of
interest to
contra
125
10
To
interest
from
contra
125
Total 140
Total 6,525
By
balance
c/d
3,225
Total 140
Total
6,525
Introduction to Average Due Date
• An average due date mean a date on which a single payment
maybe made in place of several payments due on dates.
Processing of working
1. Select any due date, preferably the first due date of the
transactions as the starting date.
2. Calculate the number of days from the starting date to due date
of each transaction.
3. Multiply the amount of each transaction by the number of days.
4. Add up these various products and also amount of these
transactions.
5. Divide the total of products by the total of amount of each
transactions.
6. The result of the division will be number of days of the average
due date.
Preparation for working
A business ness has purchased the goods the due dates of which are
as follows:
2020
March 10
RS. 2,200 due April 13
April 20
Rs. 1,500 due May 23
April 26
Rs. 2,000 due June 29
May 16
Rs. 3,000 due July 19.
He wishes to give a bill for total amount due; the bill to be drawn
payable on the Average Due Date. Find out the date?
Preparation for working
Due Date
Days
Amount
Product
April 13
0
RS. 2,200
0
May 23
40
RS. 1,500
60,000
June 29
77
RS. 2,000
1,54,000
July 19
97
RS. 3,000
2,91,000
Total= 8,700
Total= 5,05,000
th
Average Due Date= 5,05,000/8700 = 58 approximately. Average Due Date is therefore, 10 June.
17 days in April, 31 days in May and 10 days in June.
Thank you