Question

Royalty Accounts
Penelopment Or Shortworkings:
Problem 2:
(When there is fixed recoupment of short workings and short workings
written off)
A company leased a colliery on 1.1.2007 at a minimum rent of Rs. 40,000
per year merging into a royalty of Rs. 3 per unit with power to recoup
shortworkings over the first three years of the lease. The output of the colliery for
the first four years was 9000 units, 12,000 units, 16,000 units and 20,000 units
respectively. Give journal entries in the books of lessee and lessor.
Answer:
Analytical table
Year Output Royalty
Rs.
Minimum Short Surplus Recoup Written
Rent (Rs.) workings
ment off
13,000
4,000
2007 9,000 27,000
2008 12,000 36,000
2009 16,000 48,000
2010 20,000 60,000
40,000
40,000
40,000
40,000
8,000 8,000 9,000
20,000​

Answer 1

Answer:

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