Bank Islam entered into an Ijarah contract with Tamrin Bhd to lease an equipment for a period of 4 years. The bank purchased an equipment from a local trader on the 1^st of January 2003 for RM260,000. The bank also incurred legal fees of RM3,000 relating to the Ijarah contract which the bank considered to be material. Other detail about the Ijarah are as follows:

Fair value of the equipment:

At the beginning of 2003 RM260,000

At the end of the lease i.e. 31 December 2006 RM30,000

Number of instalment on

bi-monthly basis 24

Rentals at the end of every two months RM15,000

Estimated useful life 4 years

Estimated residual value at the end of useful life RM20,000

Estimated expenditure incurred in second year RM15,000

Required:

1. Prepare journal entries to record the above Ijarah contract in the book of Bank Islam for four years of the contract.