CR Update eBook Revenue Recognition, Cash and Accrual Bases Hathaway Health Club sold three-year memberships at a reduced rate during its opening sramotion. It sold 1,000 three-year nonrefundable memberships for $354 each. The club expects to sell 100 additional three-year memberships for $594 each over each of the next two years. Membership fees are paid when clients sign up. The dub's bookkeeper has prepared the folowing income statement for the first year of business and projected income statements for Years 2 and 3. Cash-besis income statement: Sales Equipment Year 1 1354,000 $103,000 Year 2 189.400 Year 3 Salaries and wages Advertising Rent and us Net income (loss) 50,410 4,610 33.220 $162,760 10 50,410 4,610 4,610 23,220 33.220 $1,160 $57.400 10 50,410 $1,160 "Equipment was purchased at the beginning of year 1 for $103,000 and is expected to last for three years and then to be worth $1,030 Required Convert the income statements for each of the three years to the accrual basis. Indicate a net loss with a minus sign Hathaway Health Club Income Statements Sales Expenses Depreciation Salaries and wages Advertising Rent and utilities Net income (es) Year 1 Year 2 Year 3 2. Which of the following statements is incorrect? titasconiad mhen cash is received