Topic: Islamic Accounting

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Question: Answer the following sections.

Section 1:

Asma needs financing to buy a house for RM100,000. The Islamic bank sells her a house at a markup of 10% per annum constant rate of return with a financing period of 5 years. Instalments are paid yearly.

Required:

1. Calculate the markup, Murabahah selling price, the yearly instalment, and the profit recognized per year.
2. The journal entries in the bank records for initiation and recording of the receipt of the first instalment and recognition of profit if profit is recognized when the instalments are received and all instalments are received on schedule.
3. Show the extract of the balance sheet at the beginning and end of the first year and the profit and loss account at the end of the same year.