Salam Financing

Question 11.5

The Farmer Association approached Meezan Muamalat Bank which is actively

involved in agricultural financing to finance the wheat crop of its members that is expected to
be harvested in the year 2006 using Salam contract. On 30 September 2005, Meezan
Muamalat Bank entered into a Salam contract whereby it bought from Farmers Association
100,000 metric tons of wheat for $200 million. It was agreed that Farmer Association would
deliver the wheat after 6 months from the date of signing the contract. On 5 October 2005,
Meezan Muamalat Bank paid the full amount of the contract to Farmer Association.
On 31 October 2005, Meezan Muamalt Bank entered into a separate parallel Salam
contract with K Company whereby it was agreed that the former sell to K Company 100,000
metric tons of wheat for $250 million. The specification of the wheat are identical to those
that will be supplied by Farmer Association and it was agreed by the two parties that Meezan
Muamalat Bank will deliver the wheat after 5 months from the date of signing the contract.
On 5 November 2005, K Company paid half of the amount of the contract to Meezan
Muamalat Bank.
On 31 March 2006, Farmer Association delivered 100,000 metric tons of wheat to
Meezan Muamalat Bank and the bank delivered the wheat to K Company. K Company paid
the remaining amount of the wheat on the same date.

Required:

1. Record the journal entries for the Salam and Parallel Salam transactions in the books
of the bank to record both Salam and Parralle Salam contracts.
2. Prepare extract of balance sheet and income statement for the bank.

Malay Version

Persatuan Petani mendekati Meezan Muamalat Bank yang aktif terlibat dalam pembiayaan
pertanian untuk membiayai tanaman gandum anggotanya yang diharapkan dapat dituai pada
tahun 2006 menggunakan kontrak Salam. Pada 30 September 2005, Meezan Muamalat Bank
menandatangani kontrak Salam di mana ia membeli dari Farmers Association 100,000 metrik
tan gandum dengan harga $ 200 juta. Telah dipersetujui bahawa Persatuan Petani akan
memberikan gandum tersebut setelah 6 bulan dari tarikh menandatangani kontrak. Pada 5
Oktober 2005, Meezan Muamalat Bank telah membayar keseluruhan kontrak kepada
Persatuan Petani.
Pada 31 Oktober 2005, Meezan Muamalt Bank menandatangani kontrak Salam selari yang
terpisah dengan K Company di mana telah dipersetujui bahawa yang pertama menjual kepada
K Company 100,000 tan metrik tan dengan harga $ 250 juta. Spesifikasi gandum serupa
dengan yang akan dibekalkan oleh Persatuan Petani dan telah dipersetujui oleh kedua pihak
bahawa Meezan Muamalat Bank akan memberikan gandum tersebut setelah 5 bulan dari
tarikh menandatangani kontrak. Pada 5 November 2005, Syarikat K membayar separuh
daripada jumlah kontrak kepada Meezan Muamalat Bank.
Pada 31 Mac 2006, Persatuan Petani menyerahkan 100,000 metrik tan gandum kepada
Meezan Muamalat Bank dan bank menyampaikan gandum tersebut kepada Syarikat K.
Syarikat K membayar baki gandum pada tarikh yang sama.

Dikehendaki:

1. Rekodkan catatan jurnal untuk transaksi Salam dan Parallel Salam di buku-buku bank
untuk mencatat kontrak Salam dan Parralle Salam.
2. Sediakan ekstrak kunci kira-kira dan penyata pendapatan untuk bank.