At the end of 19x9, two employees at Zest Manufacturing, Hannie Healthkick and Nomxolisi Loud-Racket decided to quit their jobs. They had 25 years of experience in manufacturing equipment for Xtra - Active Gyms across the country.

They collected a total of R500 000 between the two of them, and planned to open their own gym, based on their expertise. After brainstorming, they decided to register the entity under the name Health and Kickstart Gym (HKG).

On 1 March 20x0, after successfully completing the registration, the friends opened their gym. In an attempt to gain entry into the fitness market, HKG decided to run a special offer to entice fitness freaks to move from other gyms to HKG.

The special ran for the first month only and specified these conditions:

All members who joined in the first month and signed a 3-year contract would pay a low fee of R1 800 for the entire 3-year period at no additional cost.

As per the agreement, the payment would have to be made in the first month, that is, March 20x0.

At the end of March, HKG noted that 1 250 people had taken advantage of the offer and paid the R1 800 before month end.

At the end of the first financial year (28 February 20x1), the accountant showed the entire amount received as revenue for the current year. An amount of R2 250 000 was showed on the statement of profit or loss & other comprehensive income for the year ended 28 February 20x1.

Health and Kickstart are uncertain as to the treatment of this and have approached you to find out whether the cash received from all 1 250 gym members has been correctly recorded.

You are required to:

Advise HKG as to whether the cash received was appropriately treated as income using the accounting framework. If it was incorrect, please provide the correct treatment