An Islamic bank provided $400,000 for a three-year mudaraba financing contract at the profit sharing ratio of 75:25 between the bank (rabb al-mal) and a corporation (mudarib) respectively. Assume that the venture experienced profits and losses as the followings: Year Profit / (Loss) First $ 150,000 Second $50,000 Third ($100,000) Prepare the relevant journal entries of the above transactions to recognize asset and profit or loss, and show how profit or loss will be divided between the bank as rabb al-mal and the corporation as mudarib and how they will be stated in the income statements respectively at the end of first, second, and third year, if the profit or loss of mudarabah is determined at: (A) The end of each-period

An Islamic bank provided $400,000 for a three-year mudaraba financing contract at the profit sharing ratio of 75:25 between the bank (rabb al-mal) and a corporation (mudarib) respectively. Assume that the venture experienced profits and losses as the followings: Year Profit / (Loss) First $ 150,000 Second $50,000 Third ($100,000) Prepare the relevant journal entries of the above transactions to recognize asset and profit or loss, and show how profit or loss will be divided between the bank as rabb al-mal and the corporation as mudarib and how they will be stated in the income statements respectively at the end of first, second, and third year, if the profit or loss of mudarabah is determined at: (A) The end of each-period

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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