Question 5 Simplycity sells cosmetic related products. The company approached RI IB Islamic Bank to apply for a funding of an order of 10 vans to be imported from Japan to be used for delivering their products in Malaysia. The purchase price of one van is $400,000. RHB Islamic Bank agreed to finance the transaction on the basis of Murabahab at a profit margin of 8% per annum. Simplycity paid 10% of the purchase price as 'Hamish Jiddiyyah to RHB Islamic Bank. The company also agreed that if they fail to pay on time, a penalty of 1% of the receivable amount will be charged for late payment. However, following the guideline of the Sharia Advisory council, RHB Islamic Bank will disburse the late payment charges to charity. Simplycity also agreed to settle the Murahahah financing over a five year period on yearly instalment. On 1 February 2012 after a discussion with the vendor of the vans in Japan, RHB Islamic Bank fully paid the purchase price of the shipments. The following are the details of the transaction: Shipment related cost Amount (S) Date 4,000,000 1 February 2012 Purchase price Shipping and Insurance cost 100,000 1 April 2012 Port handling expenses 50,000 15 May 2012 Murabahah Transaction Hamish Jiddiyyah ? 15 January 2012 Murabahah Financing date ? 30 June 2012 Installments details Number of installments 5 years= 5 Installments First installment date 30 June 2012 Second installment date 30 June 2013 (Simplycity only paid on 30 September 2013) Third installment date 30 June 2014 Required: a. Prepare the necessary JOURNAL ENTRIES for the transactions in the book of RHB Islamic Bank at the commencement of the transaction, delivery of the shipment and payment of the installments up till 30 June 2013. b. What will happen to Murabahah financing amount if the amount paid by Simplycity on 15 January 2012 is Urboun and the customer concludes the sale? c. Murabahah financing is different from the conventional deferred payment sale. Discuss the differences between Murabahah and conventional deferred payment sale. Question 5 Simplycity sells cosmetic related products. The company approached RI IB Islamic Bank to apply for a funding of an order of 10 vans to be imported from Japan to be used for delivering their products in Malaysia. The purchase price of one van is $400,000. RHB Islamic Bank agreed to finance the transaction on the basis of Murabahab at a profit margin of 8% per annum. Simplycity paid 10% of the purchase price as 'Hamish Jiddiyyah to RHB Islamic Bank. The company also agreed that if they fail to pay on time, a penalty of 1% of the receivable amount will be charged for late payment. However, following the guideline of the Sharia Advisory council, RHB Islamic Bank will disburse the late payment charges to charity. Simplycity also agreed to settle the Murahahah financing over a five year period on yearly instalment. On 1 February 2012 after a discussion with the vendor of the vans in Japan, RHB Islamic Bank fully paid the purchase price of the shipments. The following are the details of the transaction: Shipment related cost Amount (S) Date 4,000,000 1 February 2012 Purchase price Shipping and Insurance cost 100,000 1 April 2012 Port handling expenses 50,000 15 May 2012 Murabahah Transaction Hamish Jiddiyyah ? 15 January 2012 Murabahah Financing date ? 30 June 2012 Installments details Number of installments 5 years= 5 Installments First installment date 30 June 2012 Second installment date 30 June 2013 (Simplycity only paid on 30 September 2013) Third installment date 30 June 2014 Required: a. Prepare the necessary JOURNAL ENTRIES for the transactions in the book of RHB Islamic Bank at the commencement of the transaction, delivery of the shipment and payment of the installments up till 30 June 2013. b. What will happen to Murabahah financing amount if the amount paid by Simplycity on 15 January 2012 is Urboun and the customer concludes the sale? c. Murabahah financing is different from the conventional deferred payment sale. Discuss the differences between Murabahah and conventional deferred payment sale
