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Question: Automatics Ltd. granted a licence to P. Reynolds to manufacture and sell an automatic device on the following terms:
(a) the licence to commence on 1st January, 1958, and to operate for four years.
(b) Reynolds to pay a minimum sum of £1,500 per annum, merging into a royalty of 5/- per device sold; the sum to be paid on 31st December in each year.
(c) In any year in which the minimum sum was in excess of the royalty, Reynolds to have the right to recoup such sums out of the royalties due in excess of the minimum in any subsequent year.
The numbers of devices sold were:
1958 3,600
1959 5,800
1960 8,500
1961 5,200
Assuming that all payments were duly made, and excesses of minimum payments over royalties were considered recoverable, show the ledger accounts recording the transactions in the books of P. Reynolds The books were closed on 31st December each year.
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