Accounting - II 3.

Solutions to
Text Book Exercises
Chapter – 3

ACCOUNT CURRENT

1. Interest Tables Method :

Solution – 1 :
Murthy in Account Current with Achari as on June 30th, 2003

Date Particulars No.of Interest Amount Date Particulars No.of Interest Amount
days days
2003 Rs. Rs. 2003 Rs. Rs.
Jan.1 To Sales 180 49.32 2,000.00 Jan.10 By Bills receivable 109 11.95 800.00
(Due Date Mar.13)
Feb.15 To Bills payable (Due Date 73 6.00 600.00 Jan.25 By Cash 156 8.55 400.00
Ap.18)
Mar.10 To Sales (Due Date Mar.30) 92 18.90 1,500.00 Feb.10 By Purchases 140 14.38 750.00
June 5 To Sales 25 1.71 500.00 Ap.10 By Cash 81 6.66 600.00
June To Interest 32.01 May.10 By Purchases (Due Date 36 1.97 400.00
30 May 25)
June 20 By Cash 10 0.41 300.00
June 30 By Balance of interest – 32.01
Account Current 3.2

contra
June 30 By Balance c/d 1,382.01
75.93 4,632.01 75.93 4,632.01
2003 To Balance b/d 1,382.01
July 1

Note : For each entry we have to calculate days upto June 30 th. The interest is to be calculated. In determining the due date of bill we have to add
3 days of grace. Let us workout the interest for the first item.

Interest = Rs.2,000 x 5/100 x 180/365 = Rs.49.32

2. Product Method :

Solution –2

Raju in Account Current with Ravi as on September 30th, 2003

Date Particulars No.of Amount Product Date Particulars No.of Amount Product
days days
2003 Rs. 2003 Rs.
July 12 To Sales 80 4,000.00 3,20,000 July 18 By Cash 74 1,000.00 74,000
July 31 To Interest 33.70 July 31 By Difference in 2,46,000
products
July 31 By Balance c/d 3,033.70
4,033.70 3,20,000 4,033.70 3,20,000
Aug.1 To Balance b/d 3,033.70

Interest = Difference in Products X Rate of interest = 2,46,000 X 5

365 x 100 365 x 100 = Rs.33.70
Accounting - II 3.1

Solution – 3

B in Account Current with A as on June 30th, 2002

Date Particulars No.of Amount Product Date Particulars No.of Amount Product
days days
2002 Rs. 2002 Rs.
Jan.1 To Balance b/d 181 1,000.00 1,81,000 Jan.30 By Sales returns 151 200.00 30,200
Jan.20 To Sales 161 1,200.00 1,93,200 Feb.20 By Cash 130 700.00 91,000
Mar.20 To Sales 102 1,000.00 1,02,000 Ap.10 By Bills receivable (Due 48 1,200.00 57,600
Date May 13)
June 20 To Sales 10 2,500.00 25,000 Ap.24 By Cash 67 700.00 46,900
June 25 To Cash 5 500.00 2,500 June 30 By Balance c/d 3,450.45
June 30 To Interest 50.45
6,250.45 5,03,700 6,250.45 2,25,700
July 1 To Balance b/d 3,450.45

Note :

1. Interest on Debit Items 5,03,700 x 5

365 x 100 Rs. 69.00
2. Interest on Credit items 2,25,700 x 3
365 x 100 Rs.18.55
Rs.50.45
Account Current 3.2

3. While calculating the days, we have to add 3 days of grace to the due date of the bill.

Solution – 4
Dravid in Account Current with Gangooly as on March 31st, 2003

Date Particulars No.of Amount Product Date Particulars No.of Amount Product
days days
2003 Rs. 2003 Rs.
Jan.15 To Sales 75 5,000.00 3,75,000 Jan.1 By Balance b/d 90 1,000.00 90,000
Feb.12 To Sales (Due Date 39 2,700.00 1,05,300 Feb.4 By Bills receivable (Due 24 2,000.00 48,000
Feb.20) Date Mar.7)
Feb.28 To Sales (Due Date (-) 20 1,200.00 (-) 24,000 Feb.18 By Sales returns 39 450.00 17,550
Ap.20)
Mar.7 To Bills receivable 24 2,050.00 49,200 Mar.15 By Cash 16 500.00 8,000
Mar.31 To Interest 46.84 Mar.31 By Difference in 3,41,950
products
Mar.31 By Balance c/d 7,046.84
10,996.84 5,05,500 10,996.84 5,05,500
Ap.1 To Balance b/d 7,046.84

Working Notes :

Interest = Difference in Products X Rate of interest = 3,41,950 X 5

365 x 100 365 x 100 = Rs.46.84

Notes :

1. When both date of transactions and due date is given, we have to calculate the number of days from due date only.
2. When trade discount is given, we have to take the amount after deducting such discount only.
Accounting - II 3.1

Solution – 5 :
Govind in Account Current with Gopal as on September 30th, 1999

Date Particulars No.of Amount Product Date Particulars No.of Amount Product
days days
1999 Rs. 1999 Rs.
July 12 To Sales 80 1,430.00 1,14,400 July 18 By Cash 74 500.00 37,000
July 22 To Cash 70 800.00 56,000 July 28 By Sales returns 64 200.00 12,800
Sept.30 To Interest 16.52 Sept.30 By Difference in 1,20,600
products
Sept.30 By Balance c/d 1,546.52
2,246.52 1,70,400 2,246.52 1,70,400
Oct.1 To Balance b/d 1,546.52

Difference in Products  Interest rate 1,20,600  5

Interest    Rs.16.52
365 x 100 365  100

Note : As interest rate is not given in the sum we assumed it as 5%

Solution – 6 :
Suresh in Account Current with Naresh as on April 30th, 2003

Date Particulars No.of Interest Amount Date Particulars No.of Interest Amount
days Numbers days Numbers
2003 Rs. 2003 Rs.
Jan.1 To Balance c/d 120 3,600 3,000.00 Jan.30 By Purchases 90 900 1,000.00
Jan.16 To Sales 104 3,120 3,000.00 Mar.25 By Bills receivable (Due 2 20 1,000.00
Date April 28)
Feb.18 To Cash 71 1,420 2,000.00 Ap.30 By Balance of Interest 7,320
Numbers
Account Current 3.2

Ap.10 To Cash 20 100 500.00 Ap.30 By balance c/d 6,600.27

Ap.30 To Interest (7,320 x 100.27
5/365)
8,240 8,600.27 8,240 8,600.27
May 1 To balance b/d 6,600.27

Note : For every item first we have to calculate product and the same is to be divided by 100. For opening balance interest numbers
is to be calculated in the following way.

Rs.3,000 x 120 = Rs.3,60,000/100 = Rs.3,600.

4. Periodic Balance Method :

Solution – 7 :
Sukumar Bros. in Account Current with Andhra Bank as on June 30th, 2003

Date Particulars Debit Credit Debit/Credit Balance No.of Days Debit Credit
Balance Balance products Products
2003 Rs. Rs. Rs.
Jan.4 By Cash - 10,000 Cr. 10,000 16 - 1,60,000
Jan.20 By Cash a/c 6,000 Cr. 16,000 25 - 4,00,000
Feb.14 To Cheque No. 8,000 - Cr. 8,000 24 - 1,92,000
Mar.10 By cash - 10,000 Cr. 18,000 36 - 6,48,000
Ap.15 To Cheque No… 20,000 - Dr. 2,000 27 54,000 -
May 12 By Cash - 7,000 Cr. 5,000 29 - 1,45,000
June 10 To Cheque No… 4,000 - Cr. 1,000 20 - 20,000
June 30 By Interest (128.63 – 7.40) 121.23 Cr. 1,121.23 -
To Balance c/d 1,121.23
33,121.23 33,121.23 54,000 15,65,000
July 1 To Balance b/d Cr. 1,121.23
Accounting - II 3.1

Calculation of Interest :

Interest on Credit Products Rs.15,65,000 x 3 128.63 For one

365 x 100 day
Interest on Debit Products Rs.54,000 x 5 7.40 For one
365 x 100 day
Net Interest 121.13

5. Red Ink Interest Method :

Solution – 8 :

Haribabu in Account Current with Saibabu as on 31st March, 2002

Date Particulars No.of Amount Product Date Particulars No.of Amount Product
days days
2002 Rs. 2002 Rs.
Jan.1 To Balance b/d 90 4,000.00 3,60,000 Feb.5 By Cash a/c 54 2,000.00 1,08,000
Jan.15 To Sales 75 3,000.00 2,25,000 Feb.25 By Sales returns a/c 34 500.00 17,000
Feb.20 To Sales 39 5,000.00 1,95,000 Mar.10 By Cash 21 1,000.00 21,000
Feb.26 To Sales (Due Date (-) 20 2,500.00 (-) 50,000 Mar.31 By Difference in 5,36,000
Ap.20) Products
Mar.31 To Sales (Due Date May (-) 40 1,200.00 (-) 48,000 ‘’ By Balance c/d 12,288.11
10)
Mar.31 To Interest on product 88.11
balance
15,788.11 6,82,000 15,788.11 6,82,000
Ap.1 To Balance b/d 12,288.11
Account Current 3.2

Balace of products  Rate of Interest 1,84,500  5

Interest    Rs.25.27
365 x 100 365 x 100
Solution – 9 :
Suresh in Account Current with Ramesh as on June 30th, 2003

Date Particulars No.of Amount Product Date Particulars No.of Amount Product
days days
2003 Rs. 2003 Rs.
Jan.1 To Sales 180 1,120.00 2,01,600 Jan.10 By Cash 171 600.00 1,02,600
Mar.5 To Bills payable (Due 83 1,000.00 83,00 Feb.15 By Bills receivable (Due 73 500.00 36,500
Date April 8) date Ap.18)
June To Balance of products 1,84,500 Mar.2 By Purchases 120 2,750.00 3,30,000
30
June To Balance c/d 1,755.27 June 30 By Interest 25.27
30
3,875.27 4,69,100 3,875.27 4,69,100
July 1 By Balance b/d 1,755.27

Balace of products  Rate of Interest 1,84,500  5

Interest    Rs.25.27
365 x 100 365 x 100

Solution – 10 :
Bashir Ahmed in Account Current with Rama & Co. as on 30th, June 2004

Date Particulars No.of Amount Product Date Particulars No.of Amount Product
days days
2004 Rs. 2004 Rs.
Ap.1 To Balance b/d 91 2,000.00 1,82,000 Ap.10 By Cash 81 1,200.00 97,200
May 25 To Sales 36 1,500.00 54,000 Ap.10 By Purchases 70 800 56,000
June To Sales 5 500.00 2,500 May 25 By Bills receivable (Due (-) 28 1,200 (-) 33,600
Accounting - II 3.1

25 Date July 28)

June To Interest 32.49 June 30 By Difference in 1,18,900
30 products
June 30 By Balance c/d 832.49
4,032.49 2,38,500 4,032.49 2,38,500
July 1 To Balance b/d 832.49

Note : Since rate of interest is not given, we have assumed it as 10%

Balace of products  Rate of Interest 1,18,900  10

Interest    Rs.32.49
365 x 100 365 x 100

Solution – 11 :
X & Co. in Account Current with Y & Co. as on 30-6-2004

Date Particulars No.of Amount Product Date Particulars No.of Amount Product
days days
2004 Rs. 2004 Rs.
Mar.1 To balance b/d 122 5,000.00 6,10,000 Ap.1 By Cash 79 2,000.00 1,58,000
Ap.28 To Sales 63 6,000.00 3,78,000 May 21 By Purchases 39 4,000.00 1,60,000
June To Interest 84.70 June 5 By Bank 25 2,000.00 50,000
30
June 30 By Difference in 6,20,000
products
June 30 By Balance c/d 3,084.70
Account Current 3.2

11,084.70 9,88,000 11,084.70 9,88,000

July 1 To Balance b/d 3,084.70
Note : Since rate of interest is not given, we have assumed it as 5%; 2004 is leap year