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)

Answer rating: 100% (QA)

The City government unit 1 Construction in progress account Dr 460000 Al H... View the full answer