DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : B. VIJAYA KUMAR
Designation : Lecturer
Branch : Commercial & Computer
Practice (CCP)
Institute : GPW/Guntur
Year/Sem : II Yr Sem 3 (C-05)
Subject : ACCOUNTANCY-II
Sub-Code : CCP-302
Topic : ACCOUNT CURRENT
Duration : 50 minutes
Sub Topic : ACCOUNT CURRENT
Teaching Aids : PPT ANIMATION

CCP302.16 1
Account Current
At the end of this class, you would be able to
know:
(3) Interest numbers Method of calculating interest

CCP302.16 2
CCP302.16 2
Recap
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

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CCP302.16 3
METHODS OF CALCULATING INTEREST

INTEREST PRODUCT INTEREST PERIODICAL EPOQUE

TABLES METHOD NUMBERS BALANCE METHOD
METHOD METHOD METHOD

CCP302.16 4
Recap
 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

CCP302.16 5
CCP302.16 5
 Recap Contd.

2. Product Method

 MULTIPLY the AMOUNT each item by NO.OF.DAYS

for Interest calculation. YOU will get a PRODUCT

 This PRODUCT is entered in Product column on

DEBIT and CREDIT sides of Account Current

CCP302.16 6
CCP302.16 6
 Recap Contd.

2. Product Method

 First, BALANCE the PRODUCT columns

 INTEREST calculated on balance of products for

ONE DAY (if period calculated in DAYS) (or)
ONE MONTH (if calculated in MONTHS)

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CCP302.16 7
 Recap Contd.

2. Product Method

 Place the INTEREST amount in the “Amount”

column of Debit/Credit side, which has bigger

total of PRODUCTS.

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CCP302.16 8
 Recap Contd.

2. Product Method

 In other words, Interest is calculated for

ONE DAY on the product of AMOUNT and DAYS

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CCP302.16 9
3. Interest Numbers Method

 This is just like PRODUCT METHOD with

slight difference

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CCP302.16 10
3. Interest Numbers Method
 PRODUCT is obtained by MULTIPLYING each
item’s AMOUNT with the NO. OF DAYS from the
date of transaction to the date of preparation

 This PRODUCT is divided by 100 and the

resulting figure of each item is written under
a separate column called “Interest Numbers”

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CCP302.16 11
3. Interest Numbers Method
 INTEREST NUMBERS column is balanced and
the balancing figure is placed in AMOUNT column
which has bigger total of numbers

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CCP302.16 12
3. Interest Numbers Method
 Formula for calculation of Interest:

Interest = Balance of Numbers x Rate

365

If it is a LEAP YEAR, the No. of days in

Formula should be 366 (instead of 365)

NOTE: In the formula, Balance of Numbers is multiplied by

Interest Rate ONLY But not divided by “100” because Numbers
have already been divided by 100.
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CCP302.16 13
3. Interest Numbers Method
 Formula for calculation of Interest
when period is calculated in
Number of MONTHS:

Interest = Balance of Numbers x Rate

12

NOTE: In the formula, Balance of Numbers is multiplied by

Interest Rate ONLY But not divided by “100” because Numbers
have already been divided by 100.

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CCP302.16 14
3. Interest Numbers Method
Eg1: The following Transactions took place between P and Q
during Jan 1, 2007 and Apr 30. Prepare Account Current
rendered by Q to P on April 30. Rate of Interest 6% p.a.
Rs.
Jan 1 Balance due by P .. 1,850
15 Sold goods to P .. 2,500
25 Received cash from P .. 1,500
Feb 12 Received B/R due 2 months .. 1.800
20 Sold goods to P due by Mar 31 .. 3,500
Mar 15 Purchased goods from P .. 2,000
31 Received cash from P .. 2,000
Apr 15 Sold goods to P .. 2,300
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CCP302.16 15
3. Interest Numbers Method
P in Account Current with Q as on 30th April,
2007
Dr. Cr.
INT
Date Particulars Amount Days Nos. Date Particulars Amount Days INT Nos
2007 Rs. Rs. 2007 Rs. Rs.
Jan-01To balance b/d 1,850.00 120 2220.00 Jan-25By Cash a/c 1,500.00 95 1425.00
By B/R (due on
Jan-15To
To Sales
Sales a/c
(due on 2,500.00 105 2625.00 Feb-12 Apr 15) 1,800.00 15 270.00
Feb-20 Mar31) 3,500.00 30 1050.00 Mar-15By Purchases a/c 2,000.00 46 920.00
Apr-15To Sales 2,300.00 15 345.00 Mar-31By Cash a/c 2,000.00 30 600.00
Apr-30To INT on Nos. balance 49.73 Apr-30By bal of INT Nos 3025.00
Apr-30By balance c/d 2899.73
10199.7 10199.7
3 6240.00 3 6240.00
May-01To balance b/d 2850.50

Interest Calculation: 3025 x 6 =

49.73 CCP302.16 16
CCP302.16 16
365
Summary
 Interest Numbers method is just like PRODUCT
Method of calculating Interest. The only difference
is, after PRODUCT is calculated (multiplying the
No. of days with each item amount), it is divided by
100. The resulting figure is “Interest Number”

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CCP302.16 17
Quiz
1) In the formula of INTEREST NUMBERS method,
product is multiplied by Interest Rate only but not
divided by 100 because:

a) Interest Numbers are already divided by 100.

b) Above Statement is FALSE.

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CCP302.16 18
Frequently Asked Questions:
1. Briefly explain the Interest Numbers Method of
calculating Interest.

2. Distinguish between Account Current and Current

Account.

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CCP302.16 19
Assignment
1. From the following transactions, make out an Account
Current to be rendered by Abhisha to Maanasa
Rs.
2008 Jan 1 Sold goods to Maanasa.. 22,550
Feb 4 Received cash from Maanasa ..16,000
Mar 9 Bought goods from Maanasa .. 5,800
Apr 12 Paid cash to Maanasa .. 2,750
May 10 Sold goods to Maanasa .. 3,000

Calculate interest @ 6% and prepare Account Current

up to June 30, 2008.
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CCP302.16 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

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CCP302.16 21