Yoga Now, a yoga studio, is a calendar year business that uses the accrual method. On July 1, 2013, Yoga Now sold, for $500, a punch card that allows the client to attend 50 yoga classes anytime over the next two years. The client attended 10 classes in 2013, and 35 classes in 2014. The last 5 classes will be taken in 2015, if at all. When should the $500 be reported by Yoga Now?

a. The entire $500 should be reported in gross income in 2013, the year the card was sold.

b. Yoga Now should report $100 in gross income in 2013, and $400 in 2014.

c. Yoga Now should report $250 in gross income in 2013 and $250 in 2014.

d. Yoga Now should report $100 in gross income in 2013, $350 in 2014, and $50 in 2015.