If a person owes a number of sums to a person on different dates, he may like to pay the whole amount on such a day as will involve neither party in loss of interest. Such a day is known as Average Due Date. It is calculated in the following way:

(i)       Take one of the due date as the base date.

(ii)      Calculate the number of days between the base date and the due date of every transaction. The base-date is not to be taken into account.

(iii)    Multiply each amount by its respective number of days as calculated in the second step.

(iv)    Add the amounts and the products separately.

(v)      Divide the sum of products by the total of the amounts. This give the number of days the average due-date is away from the base date.

(vi)    Add the number of days to the base date and thus arrive at the average due date.

Note :-We can take any of the due dates as the base date. The products of amount falling due before that date will then be minus and the products for amounts due after that will be plus. The difference of the minus and plus totals should be divided by the total amount and the average due date ascertained accordingly.

Ø  If the minus products are higher, the days thus arrived at should be deducted from the base date.

Ø  If the plus total is higher, the days should be added to the base date.

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