The Maroon & Orange Gym,Inc

question 21

Multiple Choice

The Maroon & Orange Gym,Inc.,uses the accrual method of accounting.The corporation sells memberships that entitle the member to use the facilities at any time.A one-year membership costs $480 ($480/12 = $40 per month) ; a two-year membership costs $720 ($720/24 = $30 per month) .Cash payment is required at the beginning of the membership period.On July 1,2013,the company sold a one-year membership and a two-year membership.The company should report as gross income from the two contracts:

• A)$600 in 2013.
• B)$960 in 2013.
• C)$180 in 2015.
• D)$780 in 2014.
• E)None of the above.

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