Home Ofce, Inc., an accrual basis taxpayer, leases a copying machine to a new customer on December 27', 2017'. The machine was to rent for $300 per month for a period of 36 months beginning January 1, 2018. The customer was required to prepay 2 months rent at the time the lease was signed on December 27, 201?. The customer was also required to pay a $2,000 damage deposit at the time the lease was signed. Determine the amount of gross income Home Ofce recognizes in .201 7. Effect on 2017 Gross Income: Kathy, an accrual basis taxpayer, operates a gym. She sells memberships that entitle the member to use the facilities at any time. A oneyear membership costs $300 ($300f12 = $25 per month); a two-year membership costs $576 ($57624 = $24 per month). Cash payment is required at the beginning of the membership. On August I, 201 6, Kathy sold a one-year membership and a two-year membership. Determine the amount of income Kathy recognizes in 201 7. Effect on 2017 Gross Income