TUTORIAL – SALAM

Q1
Record journal entries for Salam and Parallel Salam transactions

Year Details $ $
2014
$500,00
1-Mar Salam Financing 0
Cash $500,000
Recognition of Salam

$550,00
5-Apr Cash 0
Parallel Salam $550,000
Recognition of Parallel Salam

$200,00
15-Jun Salam Commodities 0
Salam Financing $200,000
Received commodities from seller ($10,000 x 20 tonnes)

$200,00
20-Jun Parallel Salam 0
Salam Commodities $200,000
Delivered commodity to customer

Parallel Salam $20,000

Profit and Loss $20,000
Profit from Parallel Salam (($11,000 x 20 tonnes) -
$200,000)

$200,00
30-Jul Salam Commodities 0
Salam Financing $200,000
Received commodities from seller ($10,000 x 20 tonnes)

$200,00
5-Aug Parallel Salam 0
Salam Commodities $200,000
Delivered commodity to customer

Parallel Salam $20,000

Profit and Loss $20,000
Profit from Parallel Salam (($11,000 x 20 tonnes) -
$200,000)

$100,00
10-Aug Salam Commodities 0
Salam Financing $100,000
 Received commodities from seller ($10,000 x 10 tonnes)

$100,00
15-Aug Parallel Salam 0
Salam Commodities $100,000
Delivered commodity to customer

Parallel Salam $10,000

Profit and Loss $10,000
Profit from Parallel Salam (($11,000 x 10 tonnes) -
$100,000)
Q2
a. Prepare JOURNAL entries to record the Salam and parallel Salam contracts.

Year Details $ $
2015
$300,00
1-Jan
Salam Financing 0
$300,00
Cash 0
Recognition of Salam

$125,00
1-Feb
Cash 0
$125,00
Salam Receivables 0
$250,00
Parallel Salam 0
Recognition of Parallel Salam- Chicken Rice Sdn Bhd

Cash $62,500
Salam Receivables $62,500
$125,00
Parallel Salam 0
Recognition of Parallel Salam- Ayam Penyet Sdn Bhd

$200,00
30-Jun
Salam Commodities 0
$200,00
Salam Financing 0
Received commodities from seller (50,000 kg x
($300,000/75,000 kg))

$200,00
Parallel Salam 0
$200,00
Salam Commodities 0
Delivered commodity to customer - Chicken Rice Sdn Bhd

$112,50
Salam Commodities 0
$112,50
Cash 0
Bought commodity from the market (25,000 kg x $4.50)

$112,50
Parallel Salam 0
$112,50
Salam Commodities 0
Delivered commodity to customer - Ayam Penyet Sdn Bhd

Parallel Salam $20,000

Profit and Loss $20,000
 Profit from Parallel Salam - Chicken Rice Sdn Bhd ($250,000 -
$200,000)

$125,00
Cash 0
$125,00
Salam Receivables 0
Payment for Parallel Salam - Chicken Rice Sdn Bhd

Parallel Salam $12,500

Profit and Loss $12,500
Profit from Parallel Salam - Ayam Penyet Sdn Bhd ($125,000 -
$112,500)

Cash $62,500
Salam Receivables $62,500
Payment for Parallel Salam - Ayam Penyet Sdn Bhd

Account Receivables $1,000

Penalty $1,000
Penalty charges ($100,000 x 1%)

$100,00
30-Aug
Salam Commodities 0
$100,00
Salam Financing 0
Received commodities from seller (25,000 kg x
($300,000/75,000 kg))

Cash $1,000
Account Receivable $1,000
Penalty paid
Q3
Record journal entries for the Salam Financing and Parallel Salam Financing transactions

Year Details $ $
2014
1-Feb Salam Financing $50,000
Cash $50,000
Recognition of Salam

10-May Cash $60,000

Parallel Salam $60,000
Recognition of Parallel Salam

15-Oct Salam Commodities $40,000

Salam Financing $40,000
Received commodities from seller ($500 x 80 metric tons)

Salam Commodities $11,000

Cash $11,000
Bought commodity from the market ($550 x 20 metric tons)

Account Receivables $1,000

Profit and Loss $1,000
Non-delivery charges (20 metric tons x ($550 - $500))

30-Oct Parallel Salam $51,000

Salam Commodities $51,000
Delivered commodity to customer

Parallel Salam $9,000

Profit and Loss $9,000
Profit from Parallel Salam ($60,000 - $51,000)