Minerals Ltd. leased a property from Shri B. Sarkar at a royalty of ~ 1.50 per ton with a minimum rent of ~ 10,000 per annum. Each years excess of minimum rent over royalties is recoverable out of royalties of next five years. In the event of a strike and the minimum rent not being reached, the lease provided that the actual royalties earned for the year discharged all rental obligations for the year.

The results of working of the property are given below: (actual royalty)

2007---- Nil; 2008 ---- ~ 3,300; 2009 ---- ~ 9,000; 2010 ---- ~ 11,100; 2011 ---- ~ 14,000; 2012 ~ 15,000; 2013 (strike year) ---- ~ 8,000; 2014 ~ 15,200.

Write up the Minimum Rent Account and Royalties Account showing the amount charged to Profit and Loss Account each year.

Answer rating: 100% (QA)

SOLUTION Based on the information provided here are the journal entries for the Minimum Rent Account ... View the full answer