Identify the correct journal entries at the time of contracting the murabaha contract under the following scenario:

Question:

Identify the correct journal entries at the time of contracting the murabaha contract under the following scenario: An Islamic bank enters into a murabaha financing agreement for a plant at a cost of

$300,000 and profit of $100,000. It has purchased the asset already.

a. Debit: Murabaha Financing; Credit: Equipment and Deferred Profit

b. Debit: Cash; Credit: Equipment and Deferred Profit

c. Debit: Murabaha Financing; Credit: Cash and Profit with the appropriate amounts

d. Debit: Murabaha Financing; Credit: Accounts Payable and Deferred Profit.

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Related Book For  book-img-for-question

Principles Of Islamic Accounting

ISBN: 9781119023296

1st Edition

Authors: Nabil Baydoun, Maliah Sulaiman, Roger J. Willett, Shahul Ibrahim

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