Installment Register. All contracts are registered in numerical order, in an installment register ruled as shown in Fig. 23. One line is used for each contract, the particulars recorded being the date and number of the contract, name and address of the buyer, and the amounts to be credited to the different sales accounts. It is not necessary to list the articles sold, as a complete list will be found in the contract.
The footings of the money columns are carried forward to the end of the month, when the totals are credited to the sales accounts in the general ledger. The footing of the total column, which is the total of all installment sales, is posted to the debit of an installment contract account in the general ledger. This is a controlling account of the installment ledger accounts.
Installment Ledger. Installment accounts necessitate a form of ledger differing from that used for ordinary accounts. The special requirement in such a ledger is space for recording a large number of payments. Fig. 24 shows a form of loose-leaf ledger sheet designed for installment accounts.
Fig. 25. Special Cash Receipt Book for Installment Collections
One of these ledger sheets is used for each installment contract. The particulars of the contract are recorded at the head of the ledger sheet, above the name and address. The particulars recorded are the number of the contract, the amount and date, amount of payments, collection day, and whether payments are to be made weekly or monthly. The body of the form is ruled for a record of payments and balances.
The ledger sheets are arranged in alphabetical order, about five-hundred sheets in each binder. Each alphabetical section is separately indexed to afford quick reference to all accounts. If the contract number only is known, reference is had to the installment register, where all contracts are recorded in numerical order.
Cash Receipts. For installment collections, it is well to provide a special cash receipt book. Such a form is shown in Fig. 25. This form is used exclusively for installment receipts, and payments are posted direct to the installment ledger. The total cash for the day is entered as one item in the general cash book.
Statement of Installment Ledger. From an accounting standpoint, installment accounts present certain difficulties not experienced in the handling of other classes of accounts receivable. There is always a question as to the real value of the accounts outstanding, a doubt as to the advisability of including the total balances in a statement of assets. A live account—one on which payments are being made regularly—is legitimately considered as good an asset as any other account receivable, but the value of the delinquent account—when payments are past due—is questionable, and if included in a balance sheet, the nature of the asset should be clearly stated.