What is Average due date?

It is an equated date on which single payment may be made in lieu of several payments due for payment on different
dates, so that neither the debtor not creditor is a looser from the point of view of interest. In the process of single payment on
the average due date, certain payments become payable before their actual due dates, whereas some other payments become
payable after their due maturity date . In other words, average due date is the arithmetic average of various payments.
Question 1: - Calculate Average Due date from the following information:
Date of the bill
August 10, 1994
October 23, 1994
December 4, 1994
January 14, 1995
March 8, 1995

Term
3 months
60 days
2 months
60 days
2 months

Amount Rs.
6,000
5,000
4,000
2,000
3,000

Question 2: - Hari owes Ram Rs. 2,000 on 1st April, 1996. From 1st April 1996 to 30th June, 1996 the following further transactions
took place between Hari and Ram.
April 10 Hari buys goods from Ram for Rs. 5,000.
May 16 Hari receives cash loan of Rs. 10,000 from Ram.
June 9 Hari buys goods from Ram for Rs. 3,000.
Hari pays the whole amount, together with interest @ 15% per annum, to Ram on 30 th June, 1996. Calculate the
interest payable on 30th June, 1996 by the Average due date method.
Question 3: - Mr. Green and Mr. Red had the following mutual dealings and desire to settle their account on the average due date:
Purchases by Green from Red:

6,000
2nd February, 1998

2,800
31st March, 1998

2,000
Sales by Green to Red;
6th January, 1998

6,600
9th March, 1998

2,400
20th March, 1998

500
You are asked to ascertain the average due date.
Question 4: - Rs. 60,000 lent on 1 January 1991 is to be repaid as under:
Rs.
5,500
on
Rs.
9,500
on
Rs.
20,000
on
Rs.
7,000
on
Rs.
18,000
on
Calculate the average due date and interest at 10% p.a.

1 January 1992
1 January 1994
1 January 1995
1 January 1997
1 January 1999

Question 5: - E owes to F the following amounts:

(i)
Rs. 5,000 due on 10th March, 1999
(ii)
Rs. 18,000 due on 2nd April, 1999
(iii) Rs. 60,000 due on 30th April, 1999
(iv)
Rs. 2,000 due on 10th June, 1999
He desire to make full payment on 30th June, 1999 with interest at 10% per annum from the average due date. Find out the
average due date and the amount of interest.
Days of Grace and Date of Maturity
A bill of exchange or promissory note matures on the date on which it falls due and it falls due on the third day after
the day on which it is expressed to be payable. These extra days are known as Days of Grace. When it is an after date
bill, the period is counted from the date of drawing the bill but when there is after sight bill the said period is counted from
the date of acceptance of bill. However, when bills is payable on demand or on presentation, it becomes due immediately on
presentation for payment.
When the day on which bill or promissory note is at maturity after including three days of grace is a public holiday or
Sundry, the due date will be preceding business day. If holiday is emergency or unforeseen holiday then the due date shall be
the next following day.

IPCC - Accounts
Average Due Date

(Home Assignment)
Question 1: - A owes B Rs. 890 on 1st January 2006. From January to March the following further transactions take place between A
and B:
January 16
A buys goods
Rs. 910
February 2
A receives Cash Loan
Rs. 750
March 5
A buys goods
Rs. 810
A pays the whole amount on 31st March, 2006 together with interest at 5% per annum. Calculate the interest by the average
due date method.
Question 2:- A trader having accepted the following several bills falling due on different dates, now desires to have these bills
cancelled and to accept a new bill for the whole amount payable on the average due date:
Serial No. of the bill
Date of bill
Amount
Usance of the bill
1.
1st March
400.00
2 months
2.
10th March
300.00
3months
3.
5th April
200.00
2 months
4.
20th April
375.00
1 month
5.
10th May
500.00
2 months
You are required to find out the said average due date.
Question 3:- Mohan Ram has accepted the following Bills drawn by Sumnath:
On 8th March,
Rs. 4,000
for 4 months
On 16 March,
Rs. 5,000
for 3 months
On 7th April,
Rs. 6,000
for 5 months
On 17th May,
Rs. 5,000
for 3 months
He wants to pay all the bills on a single day Find out this date. Interest is charged is @ 18% p.a. and Mohan Ram wants to
save Rs. 150 by way of Interest. Find out the Date on which he has to effect the payment to save interest of Rs. 150.
Question 4: - James regularly buys goods from Rahim and also sells goods to Rahim on credit. The following transactions took place
between them:
Date
Purchases from Rahim
Sales to Rahim
2004
Rs.
Rs.
January 10
20,000
--January 28
10,000
7,000
February 12
8,000
---February 21
15,000
12,000
February 28
-----16,000
March 8
9,000
10,000
They offer 30 days credit to each other. Ascertain the average due date.

IPCC - Accounts
Average Due Date