Question 1.

Discuss five differences between Zakat and tax.

Question 2.

Part I

Bank purchased a machine from the seller RM200,000 by cash and the bank leased to Mahmood the machine for 5 years using Ijarah Thumma Bai (AITAB) contract. Mahmood paid RM50,000 per year as Ijarah payment, At the end of year 5, the bank agreed to give the machine as a gift to Mahmood, thereby enabling the transfer of the ownership of the property to Mahmood.

Required:

Prepare journal entries to record the following transaction:

a)At the inception of a machine (at the time of contract).

b)When the installment is received in 1st year.

c)Transfer of ownership at the end of year 5.

Part II.

The bank and client executed a Murabahah contract at an agreed price of RM240,000 (RM200,000 cost and RM40,000 profit for a machine. The bank would receive payment by installment of RM48,000 per year for 5 years.

Required:

Prepare journal entries to record the following transaction:

a)At the inception of a machine (at the time of contract).

b)When the installment is received in 1st year.

Question 3.

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:

a)Calculate the markup, Murabahah selling price, the yearly instalment, and the profit recognized per year.

b)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.

c)Show the extract of the balance sheet at the beginning and end of the first year and profit and loss account at the end of the same year.

Question 4.

Annwar is a manufacturer of plastic containers. The statement of financial position as of December 31^st, 2019, is shown in Table 1 below.

RM

RM

Current assets

Current liabilities

Cash in hand

30,000

Trade creditors

5,000

Bank

15,000

Accrued expenses

20,000

Trade debtors

50,000

Closing stock

45,000

Work in progress

42,000

Fixed assets

Capital

267,000

Property, plant, and equipment

100,000

Reserves

120,000

Real estate investments

100,000

Profit

30,000

442,000

442,000

The following have not been adjusted:

a)The personal drawings of Annwar for the year amounted to RM200,000.

b)Annwar also donated RM20,000 to his favorite charity in November.

c)There is obsolete stock amounting to RM5,000.

Required:

Determine the zakat payable by Annwar.

Question 5.

Table 2 shows the statement of financial position of AAM Company as of December 31, 2019.

RM

RM

Current assets

Current liabilities

Accounts receivable

100,000

Accounts payable

60,000

Inventory

70,000

Overdraft

5,000

Prepayments

10,000

Dividend payable

2,000

Cash & bank

54,000

Tax payable

5,000

Dividends receivable

1,000

Long-term loan

Term loan

200,000

Fixed assets

Share capital

100,000

Property, plant, and equipment

110,000

Reserves

60,000

Real estate investments

100,000

Profit

13,000

455,000

445,000

The following have not been adjusted:

a)Inventory includes work in progress and raw materials valued at RM10,000 and RM5,000, respectively.

b)Prepayment is related to insurance and road tax.

c)Included in the bank is fixed deposit used to secure financing facility from Bank A amounting to RM10,000.

d)Within the term loan, RM25,000 is loan payable during the next year. This has not been reclassified.

e)One customer was declared bankrupt. He owed RM5,000.

Required:

Calculate zakat payable using:

1.The net assets method.

2.The net invested funds method.