Amin Mahmud Berhad (AMB) entered into a Mudharabah financing contract with Bank Johor Islam Berhad (BJIB) in which the company agreed to provide monetary capital to be managed and invested by BJIB. BJIB provides Mudharabah Al-Muqayadah investment accounts facility whereby BJIB will invest in a specific project as agreed by the client (AMB). For this project there is another investor, Sejahtera Berhad (SB) who has agreed to contribute part of the capital. The profit and loss sharing between three of them is in the ratio of 6:6:3 for AMB, SB and BJIB respectively.

BJIB then entered another Mudharabah contract (Re-Mudharabah) with Malim Jaya Berhad (MJB) to undertake a housing development project and they had agreed on the profit-sharing ratio of 50:50 (BJIB: MJB). BJIB will disburse RM15 million to MJB for the project. Upon signing the contract, BJIB had to pay RM10,000 as legal fees which BJIB considered as immaterial. BJIB agreed to absorb the cost. MJB on the other hand paid RM5,000 for their legal fees and incurred incidental cost of RM20,000.

Listed below are relevant data pertaining to the above arrangements:

 

Capital Provider	Capital Invested – RM
Amin Mahmud Berhad	6,000,000
Sejahtera Berhad	6,000,000
Bank Johor Islam Berhad	3,000,000

Profit or Loss for the Project
Year	RM’000
1	(600)
2	400
3	700
4	1,200

 

Required:

a) Determine the profit and loss to be shared from the first to fourth year for the four parties involved using Each Period method.

(10 Marks)

 

b) Prepare the necessary journal entries that BJIB will prepare in its accounting records based on the transactions in part (a) from first to fourth year. Assume that BJIB received cash for the profit distributed and BJIB is implementing MFRS9.

(10 Marks)

c) Prepare an extract of Statement of Financial Positions for BJIB at the end of year 1 until year 4.