Answer:
c. $180 in 2019
Explanation:
The company uses the accrual method of accounting. Under the method, revenues are reported on the income statement when they are earned, regardless of when the money is actually received or paid.
On July 1, 2017, the company sold a one-year membership and a two-year membership. In 2017, The Maroon & Orange Gym, Inc. has provided service for 6 months of each contracts.
Gross income of one-year membership in 2017 = $40 x 6 = $240
Gross income of one-year membership in 2017 = $30 x 6 = $180
Total income = $240 + $180 = $420
In 2018, the company continued to provide service for 6 months remaining of one-year membership and 12 months remaining of two-year membership.
Gross income of one-year membership in 2018 = $40 x 6 = $240
Gross income of one-year membership in 2018 = $30 x 12= $360
Total income = $240 + $360 = $600
In 2019, the company completed providing service for 6 months remaining of two-year membership.
Gross income in 2019 = $30 x 6= $180
