In order to prove the correctness of this rule, and also to show more clearly the various details, refer to the illustration in SectionSection 144 and 145, and assume that, instead of this property being sold as a whole, it was subdivided into 5,000 lots or tracts which were sold on time, the sales being completed as before in five periods, and the payments made regularly and deeds issued as the respective contracts were paid up, as shown in column "X" of the following tabulated statement. In order to apply a double test, assume as a second hypothesis that - with the same sales and the same collections - payments were made with great irregularity and that some purchasers paid in advance and obtained their deeds, while others fell in arrears to such an extent that their payments were almost negligible. These figures are placed in column "Y."

The tract being divided into 5,000 lots and costing $60,000, the average cost price is $12 per lot; and the total selling price being $180,000, the average selling price is $36 per lot, yielding a profit of $24 a lot.

Lots Sold

Collections

No. of Contracts

Paid in Full and

Deeds Given

"X"

"y"

First period...............................

2,000

$24,000

0

650

Second "..........................

1,250

30,000

0

800

Third "..............................

1,250

36,000

0

1,000

Fourth ".........................

500

42,O00

2,500

1,200

Fifth " ..........................

.....

48,000

2,500

1,350

Total...........................

5,000

$180,000

5,000

5,000

In the following examples, the balances are worked out in detail from the tabular statement just given, in order to show exactly how these balances are arrived at. The different letters used have the following significance:

(a) is the balance appearing on the ledger.

(b) is obtained by adding the original amounts of all open contracts as explained in Section 170.

(c) is also obtained from the sub-ledger as detailed in