The sub-ledger known as the "General Contracts Ledger" should contain particulars of all those sales with deferred payments not secured by mortgage which do not belong to any special subdivision and which are known in this book as "general contracts."

The accounts in this sub-ledger may be arranged either alphabetically or numerically. The latter method is doubtless preferable, as it provides for a chronological arrangement and is uniform with the plan suggested for the mortgage ledgers. This method necessitates the use of an accompanying index, but as the employees usually designate transactions by their book numbers, reference to the index is seldom necessary. If the alphabetical arrangement is selected, a loose-leaf form of book is necessary; but for the numerical order either a bound or loose-leaf form can be used, the latter being preferable.

The legal papers in connection with such sales vary considerably in form; but whether known as leases, bonds for title, or similar name, they can be best considered for accounting purposes under a single head such as "Contracts."

The general subject of contracts will be dealt with later (Chapter XVII (Time Sales - Contracts. Section 122. Simple Form Of Contract)), and at this point it is sufficient merely to enumerate the various items of information which should appear on the general contracts ledger. It is better, as a rule, to keep only one account for each contract, and to let that include the principal, interest, taxes, and all other charges which must be paid by the purchaser before obtaining a conveyance of the title to the property which he has purchased.

The general contracts ledger, as will be seen by reference to Form 11 shown on page 38, provides for the following particulars:

1. Serial number of the contract.

2. Name of the purchaser.

3. Original amount, being the total purchase price.

4. Amount of the first payment (which is frequently considerably more than any of the subsequent periodic payments).

5. Amount of subsequent payments and their due dates.

6. Date of the contract.

7. Term of the contract (the number of years for which it is to run).

8. Rate of interest.

9. Dates when interest is to be calculated. (It is also well to note the date when the interest is payable, as it may be payable at fixed periods or it may be covered by the regular periodic payments.)

10. Street address of buildings on the property.

11. Amount of insurance called for by the contract.

12. Description of the property, with serial property number.

13. Profit.

14. Reserve.

Speaking generally, it is not the business of the vendor to see that contracts are placed on record; still, there is plenty of space in the heading of the ledger sheet shown in Form 11 to insert any notation which it may be desired to make should the purchaser have caused his agreement to be recorded.

Form II. General Contracts Ledger

Form II. General Contracts Ledger.

In practically all cases contracts are brought onto the books of account through the journal. The amount of the original payment is in each case posted to the debit of its proper account in this sub-ledger, as are all subsequent payments for taxes, etc., made by the vendor, and all charges for interest; while money received on account of any contract, whether for principal or for interest, is posted to the credit of the appropriate account. The total of the balances of the general contracts ledger will therefore agree with the balance of the Contracts account in the general ledger.

The four principal forms of sub-ledger, viz., Mortgages Receivable, Mortgages Payable, Contracts, and Property, should be of uniform size, not only as a matter of general convenience, but in order that when desired they may all be kept in one set of covers, each sub-ledger under its own index.