Bank Muslimin provides a financing facility based on Murabaha principles to Ahmad Construction. The cost of...

 

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Bank Muslimin provides a financing facility based on Murabaha principles to Ahmad Construction. The cost of financing amounted to $1,000,000 at a constant rate of return of 15% for a period of 5 years. At the end of the contract, Ahmad Construction paid only 50% of the yearly installment. Penalty charges of 2% for the arrears are waived by the bank. Required: You are required to: 1. Prepare the journal entries for all transaction periods. 2. Prepare an extract of the balance sheet and income statement of Bank Muslimin from the beginning of the contract up to year 5 showing the amount of Murabaha financing, receivables, Unearned Murabaha Income, and Murabaha income. Bank Muslimin provides a financing facility based on Murabaha principles to Ahmad Construction. The cost of financing amounted to $1,000,000 at a constant rate of return of 15% for a period of 5 years. At the end of the contract, Ahmad Construction paid only 50% of the yearly installment. Penalty charges of 2% for the arrears are waived by the bank. Required: You are required to: 1. Prepare the journal entries for all transaction periods. 2. Prepare an extract of the balance sheet and income statement of Bank Muslimin from the beginning of the contract up to year 5 showing the amount of Murabaha financing, receivables, Unearned Murabaha Income, and Murabaha income.