It is frequently difficult to ascertain the earned profits from subdivision property, owing to the large number of items and to the various causes explained above. Special forms of ledger (Forms 11, 15, SectionSection 20, 23) have therefore been devised, showing at all times the amount of profit earned and unearned on each lot under sale.

It will be seen that the headings provide for all the essential facts; the date of the contract and the original amount of the ledger entry being shown above the money column. The form also shows the method of making the first entry, which would appear on the journal as follows:

Eureka Gardens Contracts.....................

$250

To Eureka Gardens Purchase...........

$125

" " " Gains.........

125

According to the terms of this contract, the payment is $10 cash and $10 a month. In the "Debits" column is entered the amount of $250 and in the "Reserve" column $125. Heading the "Reserve" column there would also be shown the figure "50," indicating that, of every dollar paid in, 50 cents is "reserve," or unearned profits. It may be noted that on these forms unearned profits are called "reserve," so that in case the customer should see the ledger account (as he often wishes to do) his curiosity may not be excited as to the amount of profit yielded by his purchase.

As succeeding payments are made, appropriate entries are made in the "Reserve Realized" column. For instance, each $10 appearing in the "Credits" column will show $5 in "Reserve Realized."

One important result of the use of such ledgers is that, by adding all the entries in the "Reserve Realized" column for any one month, the amount of earned profits from this particular source during that month may be positively ascertained, and this renders possible the preparation of accurate monthly statements of actual earnings.

A further advantage appears at the end of the year, when a trial balance of the entire ledger is taken off, showing the balances due on contracts and the balances of "Reserve." The difference between the totals of the "Reserve" and the "Reserve Realized" columns shows the amount of unearned profits which must remain in the Gain account. The surplus in Gain account above that amount may, of course, be safely carried to Profit and Loss.

It will sometimes happen that the reserve appropriation cannot be accurately expressed in an even number of cents. In such case, the reference figure shown at the head of the

"Reserve" column should be the number of cents next below the actual amount, omitting all fractions. For instance, supposing the profits were $128 in the instance given above, the exact figure would be 55.2; the .2 is omitted, and, in order to keep the book in balance, the slight difference (which in this case would be 50 cents) is entered on a "balancing" account for the subdivision. The total amount of such fractional entry is so small that it will be perfectly safe to carry this balancing account and to write off a portion each year, depending largely upon the ratio of total cash collections for any period to total amount of contracts issued.