Chapter 6: Deposits and Investments

Question 7

SOLUTION

a. The bank’s net revenue attributable to each fund Category

Funds Amount invested Net Revenue

Current Account 15 Million 1,698,000

Unrestricted investment 175 Million 19,812,000

account

Bank’s equity 75 Million 8,490,000

265 million 30,000,000

15m/265m =5.66% x 30m=1,698,000

175m/265m=66.04% x 30m= 19,812,000

75m/265m=28.3%x 30m =8,490,000

b. The profit equalization reserve and the Investment risk reserve (URIA)

Revenue RM 19,812,000

(-) PER 3% RM 594,360

RM 19,217,640

Profit attributable to IAH (60%) RM 11,530,584

Investment risk reserve (2%) RM 230,611.6

11,299,972

c. The amount due to the unrestricted investment account holders

RM 11,530,584- RM 230,611.6
= 11,299,972

d. The amount of Hibah due to the current account holders

= 30% x RM 1,698,000
= RM 566,000

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e. The profit attributable to the equity holders (shareholders) from the investment of
all funds
RM 8,490,000 Equity + (0.4 x RM 19,217,640 URIA) + (0.7 X RM 1,698,000
Current Account)
1,188,600 Current acc + 7,687,056 (URIA net PER) + 8,490,000
= RM 17,365,656.

Part II

The following is the information pertaining to deposit types, average balance, and the
weights used for Mudarabah unrestricted investment deposits in SIB for the year
2013:

Deposit Types Average Weights

Balance

in Year 2013

$’million

6 months & less 40 0.50

9 months & less 50 0.75

12 months & less 60 1.0

More than 12 months 100 1.25

250

Required:

From the income earned by unrestricted investment account deposits from Part I
above, you are to calculate the following:

a. Weighted average balance for each category of deposit

Deposit Types Average Weights Weighted

Balance Average

in Year 2013

$’million

6 months & less 40 0.50 20

9 months & less 50 0.75 37.5

2
 12 months & less 60 1.0 60

More than 12 months 100 1.25 125

250

b. Depositor’s share of profit based on the weighted average

Deposit Types Average Weights Weighted Share of

Balance Average Profit

in Year 2013 (RM)

$’million

6 months & less 40 0.50 20 931,956.5

9 months & less 50 0.75 37.5 1,747,418

12 months & less 60 1.0 60 2,795,869

More than 12 months 100 1.25 125 5,824,727.8

250 242.5 11,299,972

c. Depositors rate of return for each category of deposit

Deposit Types Average Share of Average

Balance Profit return

in Year 2013 (RM)

$’million

6 months & less 40 931,956.5 2.3%

9 months & less 50 1,747,418 3.49%

12 months & less 60 2,795,869 4.65%

More than 12 months 100 5,824,727.8 5.82%

250 11,299,972

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Chapter 8: Musyarakah
Question 6
(a)
Year 2006 Dr Mudaraba Financing $9,000,000
Cr Cash $9,000,000
(Provision of Mudaraba Financing to Mudarib)
Year 2006 Dr Cash $1,200,000
Cr Mudaraba Profit (0.60 x $ 2,000,000) $1,200,000
(Profit in year 2006)
(b)
Year 2010 Dr Musharaka Financing $6,000,000
Cr Mudaraba Financing $6,000,000
(Convert Mudaraba Financing to Musharaka Financing)
Year 2010 Dr Cash $1,200,000
Cr Musharaka Profit (0.40 x $3,000,000) $1,200,000
(Profit in year 2010)
(c)
Statement of Financial Position (extract) as at 31st December 2006
2006
Mudaraba Financing $9,000,000

(d)
Statement of Financial Position (extract) as at 31st December 2010
2010
Musharaka Financing $6,000,000

(e)
Income Statement (extract) for the year ended
2006 2010
Mudaraba Profit/(Loss) $1,200,000 -
Musharaka Profit/(Loss) - $1,200,000

Chapter 9: Murabahah
Question 7
a. Journal entries for Jan 1, 2011.

1. Purchase of assets by bank Asset Cash

100,000 100,000
2. At the time of contracting BBA Financing Asset
(Recognition of Murabahah Account with the 100,000
Financing) Cost + Profit
150,000
Unearned

4
 BBA Financing
Income Account
with the profit
(mark-up)
50,000

a. Journal entries for Dec 31, 2011.

5. When the 1st installment is Cash Account Murabahah/ BBA

received 30,000 Financing Account
with the
installment
received
30,000
6. Recognition of Income Unearned Income Profit and Loss
10,000 10,000

b. Journal entries for Dec 31, 2012.

1. When the installment is due but Receivable Murabahah/ BBA

not yet received Account Financing Account
(30 June 2013) 30,000 with the
installment due
30,000
2. Recognition of Income Unearned Income Profit and Loss
10,000 10,000
3. Late Payment Charges Receivable Charity Payable
Account 1,500
1,500

c. Journal entries for March 31, 2013.

1. When the installment and Cash Account Receivable

penalty is received 31,500 Account
31,500

d. Journal entries for Jan 1, 2014.

Rebate for early payment Profit and Loss Murabahah

(60,000 x 7.5%) 4,500 Financing

4,500
Termination of contract Cash / Receivable Murabahah
55,500 Financing
55,500

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e. Extract of the Income Statement for year ending 2011, 2012, 2013 and 2014.

2011 2012 2013 2014

Income 10,000 10,000 10,000 15,500
earned (20,000-
4,500)

f. Extract of the Statement of Financial Position as at 31 December 2011, 2012,

2013 and 2014.

2011 2012 2013 2014

BBA Fin 120,000 90,000 60,000 -

Unearned 40,000 30,000 20,000 -

Income
80,000 60,000 40,000 -

Chapter 13: Zakat

Question 2

Adjustments:
DR Reserves 75
Cr Bills Rec 75

DR Inv Sec (Long term) 150

CR Inv Sec (Short term) 150

DR Dealing Sec 80
CR Reserves 80

DR Reserves 35
CR Charity Payable 35

Dr Bills Payable 50
CR Reserves 50

Net Assets Method

Assets ($) ‘000
Cash and balances with banks and agents 350,000
Deposits and placements with financial institutions 1,700,000
Dealing securities (1,100,000 + 80,000) 1,180,000
Investment securities (300,000 – 150,000) 150,000

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Financing of customers 4,700,000
Bills receivable (300,000 – 75,000) 225,000
8,305,000
Less: Liabilities
Deposit from customers 7,300,000
Deposits and placements of banks and other financial 60,000
institutions
Bills payable (100,000 – 50,000) 50,000
Amount owed to charity 35,000
7,445,000
Zakatable amount 860,000

Zakah due (2.5775% x 860,000) 22,166.50

Net Invested Funds Method

Shareholders’ Funds ($) ‘000
Share capital 600,000
Reserves (1,140 – 35+50+80-75) 1,160,000

Less:
Fixed Asset 500,000
Statutory deposits with Bank Negara Malaysia 250,000
Investment securities 150,000

Zakatable amount 860,000

Zakah due (2.5775% x 860,000) 22,166.50