Prepare the relevant journal entries

Reference no: EM132953001

Question

Islamic Bank Perlis has a contract with a housing company based on musharakah mutanaqisah (MM). The capital contribution by a bank is RM800 000 and the profit and loss sharing ratio is 40:60 according to their capital contribution. The duration is 4 years and the repayment of capital is RM200 000 per year. The profit and loss for this project is as follows:

Year 1 - Profit RM400 000

Year 2 - Loss RM20 000

Year 3 - Profit RM500 000

Year 4 - Profit RM600 000

Based on the information given above, you are required to:

a) Prepare the relevant journal entries.

b) Prepare extract of Statement of Comprehensive Income (Income Statement) for the 5 years period.

c) Prepare extract of Statement of Financial Position (Balance Sheet) for the 5 years period.

Reference no: EM132953001

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