In 2013 Tarlo Company agrees to construct a highway for Brice County over a three-year period (2013 through 2015). The contract price is $990,000 and the construction costs (both actual and estimated) total $660,000 for the three years. The percentage completed at the end of each year is as follows: 2013, 25%; 2014, 80%; 2015, 100%.
Required
1. Prepare a schedule showing the amount of gross profit that Tarlo Company recognizes each year using the percentage-of-completion method.
2. Prepare a schedule showing the amount of gross profit that Tarlo Company recognizes each year using the completed contract method.