DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : B. VIJAYA KUMAR
Designation : Lecturer
Branch : Commercial & Computer
Practice (CCP)
Institute : GPW/ Guntur
Year/Sem : III Sem (C-05)
Subject : ACCOUNTANCY-II
Sub-Code : CCP-302
Topic : ACCOUNT CURRENT
Duration : 50 minutes
Sub Topic : INTEREST TABLES
METHOD
Teaching Aids : PPT ANIMATION
CCP302.14 1
Account Current
At the end of this class, you would be able to
know:

(1) Interest Tables Method of Calculating Interest

CCP302.14 2
Recap
Calculation of days
 Count one extreme date only while
Calculating number of days

 Ignore date of transaction

CCP302.14 3
Recap
Calculation Of Days
 PREVIOUS DAY’S Closing Balance becomes
NEXT (FIRST) DAY’S Opening Balance.

 This is because, Opening Balance means

balance existing on the PREVIOUS DAY
(date) i.e., Closing Balance brought forward

CCP302.14 4
Recap
Calculation Of Days
 If Account Current starts with Opening Balance,
the FIRST DAY (date) also should be taken into

account.

CCP302.14 5
Recap
Calculation Of Days
 If DATE OF TRANSACTION and DATE OF
SETTLEMENT are DIFFERENT

 Take into account DATE OF SETTLEMENT

Only

CCP302.14 6
Recap
Calculation Of Days
 In case of Bills of Exchange, 3 DAYS OF
GRACE should be ADDED to know the
DATE of MATURITY of bill

 Number of Days should be calculated

from DATE OF MATURITY Only

CCP302.14 7
Reca
p
In the earlier classes, you learnt that there
are FIVE Methods for calculation of
interest,
Namely:
1. Interest Tables Method
2. Product Method
3. Interest Numbers Method
4. Periodical Balance Method
5. Epoque Method

CCP302.14 8
METHODS OF CALCULATING INTEREST

INTEREST PRODUCT INTEREST PERIODICAL EPOQUE

TABLES METHOD NUMBERS BALANCE METHOD
METHOD METHOD METHOD

CCP302.14 9
1. Interest Tables Method:
 Interest is calculated on each item by
ready-made
INTEREST TABLES

 Interest at rate AGREED by two parties to

Account Current, i.e., Receiver and Sender

CCP302.14 10
1. Interest Tables Method:

 Interest is calculated on each item FROM

DUE DATE of each transaction TO the DATE
on which Account Current is PREPARED

CCP302.14 11
1. Interest Tables Method:
 Interest is entered in INTEREST columns
on Debit and Credit sides of Account
Current

 Interest columns are BALANCED and

Balances are recorded in PRINCIPAL
AMOUNT column on both sides of Account
Current

CCP302.14 12
1. Interest Tables Method:
 FORMULA for calculation of Interest:

Interest = Amount X No. of days X Rate

365 X 100

CCP302.14 13
1. Interest Tables Method:
Eg1: Mr. A is in account current with Mr. B. The
following Transactions took place between Jan 1,
2007 and Apr 30. Prepare Account Current
rendered by B to A on April 30. Rate of Interest
5% p.a.

CCP302.14 14
1. Interest Tables Method:
Jan 1 Balance due by A .. 850
15 Sold goods to A .. 1,500
25 Received cash from A .. 500
Feb 12 Received B/R due 2 months .. 800
20 Sold goods to A due by Mar 31 .. 2,500
Mar 15 Purchased goods from A .. 1,000
31 Received cash from A .. 1,000
Apr 15 Sold goods to A .. 1,300

CCP302.14 15
 1. Interest Tables
Method:
Mr. A in Account Current with Mr. B as on 30 th
April, 2007
Dr. Cr.
Date Particulars Amount Days Interest Date Particulars Amount Days Interest
2007 Rs. Rs. 2007 Rs. Rs.
Jan-01To balance b/d 850.00 120 13.97 Jan-25By Cash a/c 500.00 95 6.51
By B/R (due on
Jan-15To Sales a/c 1,500.00 105 21.58 Feb-12 Apr 15) 800.00 15 1.64
To Sales (due on
Feb-20 Mar 31) 2,500.00 30 10.27 Mar-15By Purchases a/c 1,000.00 46 6.30
Apr-15To Sales 1,300.00 15 2.67 Mar-31By Cash a/c 1,000.00 30 4.11
By balance of
Apr-30To Interest 29.93 Apr-30 Interest 29.93
Apr-30By balance c/d 3300.00
6179.93 48.49 6179.93 48.49
May-01To balance b/d 3300.00

Note: Interest is calculated from the due date of each

transaction to the date of preparation of Account Current.
CCP302.14 16
Summary
 There are FIVE methods for calculation of Interest in
Account Current, viz.,
1. Interest Tables Method.
2. Product Method.
3. Interest Numbers Method.
4. Periodical Balance Method.
5. Époque method.

 In the “Interest Tables Method”, interest is calculated for

each item from due date of each transaction to date on
which Account Current is prepared.
CCP302.14 17
Quiz
1) Interest in Account Current is calculated by
using:

a) Logarithm tables
b) Railway time-table
c) Periodic table
d) Ready made interest tables

CCP302.14 18
Frequently Asked Questions
1. Define Account Current. Briefly explain the
Interest Tables Method of calculating
Interest.

2. Explain briefly the procedure for calculation

of days for interest?

CCP302.14 19
Assignmen
t1. From the particulars given below, prepare an
Account Current.
Rs.
2007 Jan 1 Balance due to X .. 1,200
Jan 16 Received X’s acceptance at
3 months date .. 1,600
Apr 1 Sold goods to X .. 3,200
Oct 1 Purchased goods from X .. 2,800
Oct 4 Received cash from X .. 800
Dec 6 Paid cash to X .. 400
Close X’s account in the books of A. Interest 5% p.a.
CCP302.14 20
Assignment
2) For more information on this topic, please refer to:
a) “Introduction to Accountancy” by T.S. Grewal
b) “Advanced Accountancy” by Jain & Narang
c) “Introduction to Accountancy” by S.N. Maheswari
d) “Advanced Accountancy” by Shukla & Grewal
e) “Advanced Accountancy” by Gupta & Radhaswamy
f) “Principles & Practice of Book-Keeping” by
Ch. Shanmukhaswamy
g) Any other text book suggested by your teacher
h) Previous years’ exam question papers of SBTET

CCP302.14 21