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FINANCIAL ACCOUNTING
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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Question 4.2: Bank Meethaq had agreed to contribute OR 5,000,000as monetary capital based on a five-year mudharabah financing contract (Mudharabah Mugayaddah) at the profit sharing ratio of 3:1 between the Bank (Rab al-Mal) and Al-Noor Corporation (Mudharib) respectively. Assume the following results of the venture: Year Profit / (Loss) 1 (500,000) (400,000) 350,000 3 4 500,000 620,000 -570,000 to Required: Prepare the necessary journal entries to recognize asset and profit/loss of the above transactions, and show how profit/loss will be allocated between the Bank, and the mudharib will appear in the respective income statements from the first to fifth year, if the profit of mudharabah is determined at the end of: • Each period • The contract 4.5
Transcribed Image Text:Question 4.2: Bank Meethaq had agreed to contribute OR 5,000,000as monetary capital based on a five-year mudharabah financing contract (Mudharabah Mugayaddah) at the profit sharing ratio of 3:1 between the Bank (Rab al-Mal) and Al-Noor Corporation (Mudharib) respectively. Assume the following results of the venture: Year Profit / (Loss) 1 (500,000) (400,000) 350,000 3 4 500,000 620,000 -570,000 to Required: Prepare the necessary journal entries to recognize asset and profit/loss of the above transactions, and show how profit/loss will be allocated between the Bank, and the mudharib will appear in the respective income statements from the first to fifth year, if the profit of mudharabah is determined at the end of: • Each period • The contract 4.5
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