6. PRENEED CEMETERY RECEIVABLES

Preneed sales of cemetery interment rights are usually financed through interest-bearing installment sales contracts, generally with terms of up to five years with such earnings reflected as Preneed Cemetery Finance Charges. In substantially all cases, we receive an initial down payment at the time the contract is signed. The interest rates generally range between 9.5% and 12%. Occasionally, we have offered zero percent interest financing to promote sales for limited-time offers. Preneed sales of cemetery interment rights are generally recorded as revenue when 10% of the contract amount related to the interment right has been collected. For the six month period ending June 30, 2011, 88.8% of sales of interment rights were recognized in the current year. Merchandise and services may similarly be sold on an installment basis, but revenue is recorded when delivery has occurred. For all contracts, receivables are recorded at cost and finance charges are recorded upon receipt of payment. At June 30, 2011, the balance of preneed receivables for cemetery interment rights and for merchandise and services was $18.1 million and $9.5 million, respectively.

The Company determines an allowance for customer cancellations and refunds on contracts in which revenue has been recognized on sales of cemetery interment rights. We reserve 100% of the receivables on contracts in which the revenue has been recognized and payments are 120 days past due or more, which was approximately 1.6% of the total receivables on recognized sales at June 30, 2011. The allowance is recorded at the date that the contract is executed and periodically adjusted thereafter based upon actual collection experience at the business level. At June 30, 2011, the allowance for contract cancellations was as follows (in thousands).


	June 30, 2011
Beginning balance	$	1,454
Recoveries		—
Provision		(186	)

Ending balance	$	1,268

The Company has a collections policy where past due notification is sent to the customers beginning at 15 days past due and thereafter periodically until 90 days past due. Any items on contracts that are past due 120 days are sent to a third-party collector. No uncollectible financing receivables are directly charged off to the statement of operations.

The aging of past due financing receivables as of June 30, 2011 is as follows (in thousands):


	31-60		61-90		91-120		>120		Total Past				Total Financing
	Past Due		Past Due		Past Due		Past Due		Due		Current		Receivables

Recognized revenue	$	672	$	378	$	180	$	304	$	1,534	$	17,417	$	18,951
Deferred revenue		298		164		69		140		671		7,970		8,641

Total contracts	$	970	$	542	$	249	$	444	$	2,205	$	25,387	$	27,592