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The City - part of the government unit has provided the following information for the financial year ended 31^st March 2019.The unit has signed many contracts and placed order for supplies and equipment during the year from the budget appropriations of OMR 500,000. In the month of April , City signed an agreement with Al Habeeb construction company for the construction of its office building in Muscat for an amount of OMR 460,000. The company informed 40 % completion of the project in the month of August and requested for approval and payment . On verification by the engineers of the government , a 30 % completion of the project was reported . Government approved the report and payment has been released . 60 % of the remaining work has been completed in the month of September with an approval from the government. Government has made a partial payment of OMR 100,000 , leaving the balance for a settlement in the near future. Due to an increase in the cost of the construction materials and labor charges , Al Habeeb construction company requested the government for an increase of 15% of the amount of the remaining contract work , which was agreed . Company completed the work in December with prompt payment from the government , both the outstanding bills and the current bill.

Pass necessary journal entries in the books of the The City government unit taking in to account the Encumbrance and BFBR. (10 marks. Each entry carry one mark)

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