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Ten years ago, Mobiletex Ltd. Leased a patent for the manufacture of a gadget used in mobile phones from Quickcom Ltd. The lease agreement provided

 Ten years ago, Mobiletex Ltd. Leased a patent for the manufacture of a gadget used in mobile phones from Quickcom Ltd.

The lease agreement provided for payment of royalty at the rate of Sh.70 per gadget produced with a minimum royalty of Sh.450,000 per annum.Royalties were payable on 15 March following the end of the financial year on 31 December.Short workings arising in any year were recoverable within the following two years of operations.

Mobiletex Ltd. Sub-leased the patent to Handphone Ltd. at a royalty of Sh.90 per gadget sold with a minimum rent payment of Ksh 120,000 royalties are payable at the end of each financial year on 31 December.

Given below is information about the number of gadgets produced by both companies in the first five years of operation.

Year ended

31 December

Mobiletex Ltd.

Mobile Ltd.

Production

(units)

Sales

(units)

Production

(units)

Sales

(units)

2007

2008

2009

2010

2011

2,800

4,500

5,500

5,200

7,000

1,600

2,600

3,600

4,000

5,000

800

1,100

3,000

3,900

4,200

500

1,200

2,500

4,200

4,000

Required:

Prepare ledger accounts in the books of the tenant

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