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Question: A sand and gravel company are engaged in working a sand pit. On 1st January, 1956, it entered into an agreement with the owner of the land in which the sand pit was situated providing for:
(1) A royalty of £2 per ton of sand removed.
(2) A minimum rent of £500 per annum.
(3) The recovery of short workings within a period of five years from the end of the year in which they occurred.
The amounts of sand removed during the first three years were:
1956 200 tons
1957 225 tons
1958 300 tons
The amounts due to the landlord in respect of each year were paid on 31st January in the year following. You are required to write up in the company,s books the necessary ledger accounts to record its relations with the landlord during the three years to 31st December, 1958.
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