Kamau has negotiated with Onyango for a licence to manufacture and sell weighing scales patented as "wellscale". Onyango is the registered owner of the patent. The agreement provides for a royalty to be paid to Onyango of Sh.250 for each unit sold in a year, subject to a minimum of Sh.2,500,000 per year. The shortfall in any year can be recouped from any excess of royalties over the minimum sum in the following year.
Kamau sold 8000 weighting scales in 1996 and 11000 in 1997.

From the beginning of 1998, Kamau issued a sublicence to Kiplagat for the manufacture and sale of the same units, on the terms of a royalty of Sh.300 each, a minimum sum of Sh.1,500,000 per year and the right to recover any shortfall for a year from an excess in the following year.

The sales volumes for the following two years were:

                        Kamau              Kiplagat

1998                 12000               3000

1999                 14000               4000

Required:

The accounts in Kamau's books for each of the four years 1996, 1997, 1998 and 1999 indicating the amounts to be transferred to the profit and loss account each year and the amounts carried forward at the end of each year.

Assume that all amounts due were received or paid in the appropriate year.