Question

The Bihar Coal Company Limited are lessee of a mine on a royalty of 50 paise per ton of coal raised, with a dead rent of Rs.30,000 per annum, and power to recoup shortworkings during the first five years of the lease. The output for the first three years was as follows: 1st Year 15,000 tons; 2nd year 50,000 tons; 3rd year 75,000 tons. Draft the necessary journal entries in the books of both parties. You are also required to write up Minimum Rent account, Royalties Account, Shortworkings Account, Landlord’s Account and Profit and Loss Account​

Answer 1

Minimum Rent A/c

Cr.

Date Particulars Amount(Rs.) Date Particulars Amount(Rs.)

2002 To Landlord A/c 30000 2002 By Royalty A/c 7500

By Short working A/c 22500

Total 30000 Total 30000

2003 To Landlord A/c 30000 2003 By Royalty A/c 25000

By Short working A/c 5000

Total 30000 Total 30000

2004 2004

Total 0 Total 0

Dr.

Royalties A/c

Cr.

Date Particulars Amount(Rs.) Date Particulars Amount(Rs.)

2002 To Minimum Rent A/c 7500 2002 By Profit and Loss A/c 7500