QUESTION 2 1. Falah Islamic Bank enters into a four year contract with FV Garden under Musyarakah Mutanaqisah. The total capital of the partnership was RM720,000. Falah Islamic Bank contributes 70% of the total capital. The capital contribution by Falah Islamic Bank consists of property, monetary, and gardening's equipment. The property valued at RM279,000. The book value of the property is RM315,000. The monetary capital is RM180,000. The gardening's equipment is valued at RM45,000. The profit and loss sharing ratio as agreed by both parties is 40:60 (Falah Islamic Bank: FV Garden). The repayment shall be equal throughout the contract period of four years. However, FV Garden has financial difficulties during Year 2. Hence, FV Garden only managed to pay instalment on the capital for that year, amounting to RM90,000. In Year 4, FV Garden also faced difficulties. FV Garden repay the outstanding amount of RM30,000 at the end of the contract. The profit and loss for the above project for Year 1 is a profit of RM315,000, Year 2 is a loss of RM112,500, Year 3 is a profit of RM270,000, and Year 4 is a loss of RM45,000. You are required to: a) Prepare journal entries for Year 1 to Year 4 based on the above transactions (10 marks) b) Prepare an extract of the Statement of Financial Position as at the end of Year 4. (5 marks) 2. Tawarruq financing is an instrument that Islamic banks use to provide liquidity (cash) to meet the temporary shortage of funds. Illustrate the diagram for Tawarruq financing, including the journal entry for each transaction. (10 marks) 3. Discuss the difference between Murabahah and Istisna. (5 marks) [Total: 30 marks) 4 QUESTION 2 1. Falah Islamic Bank enters into a four year contract with FV Garden under Musyarakah Mutanaqisah. The total capital of the partnership was RM720,000. Falah Islamic Bank contributes 70% of the total capital. The capital contribution by Falah Islamic Bank consists of property, monetary, and gardening's equipment. The property valued at RM279,000. The book value of the property is RM315,000. The monetary capital is RM180,000. The gardening's equipment is valued at RM45,000. The profit and loss sharing ratio as agreed by both parties is 40:60 (Falah Islamic Bank: FV Garden). The repayment shall be equal throughout the contract period of four years. However, FV Garden has financial difficulties during Year 2. Hence, FV Garden only managed to pay instalment on the capital for that year, amounting to RM90,000. In Year 4, FV Garden also faced difficulties. FV Garden repay the outstanding amount of RM30,000 at the end of the contract. The profit and loss for the above project for Year 1 is a profit of RM315,000, Year 2 is a loss of RM112,500, Year 3 is a profit of RM270,000, and Year 4 is a loss of RM45,000. You are required to: a) Prepare journal entries for Year 1 to Year 4 based on the above transactions (10 marks) b) Prepare an extract of the Statement of Financial Position as at the end of Year 4. (5 marks) 2. Tawarruq financing is an instrument that Islamic banks use to provide liquidity (cash) to meet the temporary shortage of funds. Illustrate the diagram for Tawarruq financing, including the journal entry for each transaction. (10 marks) 3. Discuss the difference between Murabahah and Istisna. (5 marks) [Total: 30 marks) 4
