FUNDAMENTALS OF BUSINESS MATHEMATICS AND STATISTICS I 1.31Average number of days =8,04,000
3,500
`
` = 230 days (approx.)
∴ Average due date will be = July 12,2009 + 230 days = Feb. 27,2010.
Note : If the date of maturity of a bill falls due on a public holiday the maturity date will be just the next
preceding business day, e.g., bill which matures on Aug. 15 becomes due on Aug. 14.
Calculation of Interest
The Average Due Date method of computation, practically, simplifies interest calculations. The interest
may be calculated from the Average Due Date to the date of settlement of accounts instead of making
separate calculation for each bill. The interest so calculated will neither affect the creditors nor the debtors,
i.e., both the debtors and the creditors will not lose interest for the period.
Under the circumstances, the creditors/drawers will receive and debtors/drawees will pay the interest at
the specified rate for the delayed period. This is particularly applicable while calculating interest on partners’
drawing in case of partnership firms.
Method of Calculation
Step 1. At first calculate the Average Due Date in the usual way.
Step 2. Ascertain the difference between the so ascertained Average Due Date and the date
of closing the books.
Step 3. Interest is calculated with the help of the following:
Interest =Rateofinterest No.of months
Amount×= 100 × 12Consider the following illustration :
Example 49 :
Satyajit and Prosenjit are two partners of a firm. They have drawn the following amounts from the firm ir the
year ending 31st March 2012:
Satyajit Prosenjit
` `
2011: Date 2011: Date
1st July 300 1st June 500
30th Sept. 500 1st August 400
1st Nov. 800
2012: 2012:
28th February 200 1st February 400
1st March 900
Interest at 6% is charged on all drawings.
Calculate interest chargeable under Average Due Date System. (Calculation to be made in months.)