1. Royalty Land lord Lessee Royalty Minimum rent or dead rent
Shortworkings
Recoupment of shortworkings
Surplus

2. When there is no royalty in a year
J.E
When there is no royalty in a year
If minimum rent is opened
1.Shortworkings A/c Dr.
Landlord A/c
2. Shortworkings A/c Dr.
Minimum rent A/c
Landlord A/c Dr.
Bank A/c
4. P&L A/c Dr.
Royalties A/c

3. 4. P&L A/c /Production A/c Dr.
When royalties are less than minimum rent and royalties are recoverable in subsequent years
Minimum Rent A/c Dr.
Landlord A/c
Royalties A/c Dr.
Shortworkings A/c
Minimum Rent A/c
3. Land lord A/c Dr.
Bank A/c
4. P&L A/c /Production A/c Dr.
Royalties A/c

4. When royalties exceed the minimum rent and shortworkings are recouped.
1.Royalties A/c Dr.
Landlord A/c
Landlord A/c Dr.
Shortworking A/c
Bank A/c
P&L A/c/ Production A/c Dr.
Royalties A/c

5. Q. B coal Ltd. Leased a colliery on 1-1-2010 at a minimum rent of Rs
Q. B coal Ltd. Leased a colliery on at a minimum rent of Rs. 15,000 merging into royalty of Rs. 1 per ton with a stipulation to recoup shortworkings over the first three years of the lease. The output for the first four years of the lease was 8,000, 1,3000, 21,000 and 18,000 tons respectively. Draft the necessary journal entries in the books of the company. Q. In the books of a lessee as on January 1, 2013 a landlord’s A/c showed a credit balance of Rs. 28,000. -Minimum rent is Rs. 56,000 -Payment to landlord is 50% of the amount payable in the year in which it is due and balance 50% in next year. Year payment S.w recovered , ,000 5,000 Calculate royalties becoming due for the year 2013 and 2014.

6. Pawan took a lease of mines from Naresh w. e. f. 1-1-2005 for 25 years
Pawan took a lease of mines from Naresh w.e.f for 25 years. The terms provided for the royalty 6 per ton raised subject to a minimum rent of 1,20,000 p.a. with a right to recoup shortworkings within next 3 years. It was also agreed that the minimum rent should be reduced proportionately in case of strikes or lock-outs in any year. The following are the details of output in tons: YEAR OUTPUT [TONS] 23,000 18,700 15,400 [Strike for 3 months] 19,000 20,600 22,600 The balance in Short-workings Account as on was ₹49,000, of which ₹ 22,000 arouse in 2009 and the balance in You are required to show the 'Royalties Account', `Short-workings Account' and Naresh's Account' in the books of Pawan for all the above 6 years.

7. When cash subsidy is given by government to recover shortworkings
Cash A/c Dr.
Shortworking A/c

8. Copy right royalties No. of books sold = Opening stock
+no. of books printed
-Specimen books
Waste books
Closing stock of books
Damages payable by lessor (author) to the Lessee (publisher)
In the books of publisher
Author’s A/c Dr.
Damages Receivable A/c
In the books of Author
Damages Payable A/c Dr.
Publishers A/c

9. Sub lease J.E in the books of lessor
When the royalties received are less than the minimum rent and shortworkings are recoverable out of future years
(a)Lessee’s A/c Dr.
Royalty Recivable A/c
Shortworking suspense A/c
(b)Bank A/c Dr.
Lessee’s A/c
(c) Royalties Recivable A/c Dr.
Profit and loss A/c

10. 2. When royalties earned exceed the minimum rent and shortworkings are recovered (A)Lessee’s A/c Dr. Royalties Receivable A/c (B)Shortworkings Suspense A/c Dr. Lessee’s A/c (C) Royalties Receivable Account Dr. Profit and loss A/c Payment of Nazarana (A)Nazarana A/c Cash A/c (B)P&L A/c Nazarana A/c

11. Q. On X obtained a mining lease and on he sub-leased a part of the mine to Y. Show ledger account in X’s books based on the following data: Year Own Sub lease ,000 ______ ,000 4, ,000 6, ,000 8,000 Royalty per Ton Rs. 1 Rs Minimum rent P.A Rs. 24,000 Rs. 10,000 Shortworking Recoverable 3 years 2 years