(20)

Contracts,

Dr.

$2,460

(21)

Purchase,

Cr.

1,375

(22)

Gains,

Cr.

1,330

(23)

Expense,

Dr.

40

These four accounts relate to a subdivision which is being handled on a "selling contract" similar to that designated in Section 178 as No. 1. The subdivision is a small one, in which there appear to have been included eighteen lots costing $90 each ($1,620 for all), and selling for a total of $2,950, thus yielding a gain of $1,330. The collections amount to $490, leaving due $2,460. Half the collections ($245) having been paid to the owners, there remains $1,375 to be paid to them as collections are made from the contract holders.

An examination of the contracts shows that those covering two lots, on which a total of $45 has been paid, are in default and the purchasers have stated that they will pay no more. These contracts were originally for $300. The following entry is made:

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

$180

Eureka Gardens Gains........................

120

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

$255

" Cancellation Profits.......................

45

The item for expense being payable by the concern is written off to Profit and Loss.