Question

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3.
Fr. Kernil owned the patent of a safety lock. Vigilant Equipments Ltd. acquired the right to
manufacture and sell the Locks for a period of ten years on the following terms:
a. Vigilant Equipment Ltd. to pay Fr. Kernil a royalty of 5 for each lock produced with a
minimum annual payment of 25,000. Accounts are to be settled annually on 31st
December
b. If in any year the royalty calculated on locks produced amounted to less than 25,000,
Fr. Kernil is to have the right to deduct the deficiency from the royalty payable in excess
of that sum (minimum rent) in the next three years. The number of locks produced was as
follows:
of
Year ended
Number
D
31st December
Produced
2012
3000
2013
2014
4000
5200
6300
2015
2016
7000
Prepare necessary ledger accounts in the books of Vigilant Equipments Ltd.
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Answer 1

Answer:

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