Lancaster Inc. began work on a $700,000 construction contract in 2024. During 2024, the company incurred costs of $300,000 (2024 cost only). On December 31, 2024, the estimated future costs to complete were $300,000.

a) Prepare journal entries in 2024 to record the gross profit or loss, if any, using the percentage of completion method.

b) Assume that in 2025 the company incurred $300,000 (2025 cost only) and estimated to complete the project in 2026 with $150,000 additional costs. Prepare journal entries in 2025 to record the gross profit or loss, if any.