Kathy, an accrual basis taxpayer, operates a gym. She sells memberships that entitle the

member to use the facilities at any time. A one$-$year membership costs $$300($ $$\frac{300}{12}=$

$$25$ per month$)$; a two$-$year membership costs $$576($ $$\frac{576}{24}=$$$24$ per month$).$ Cash

payment is required at the beginning of the membership. On July $1,$ Year $1,$ Kathy sold a

one$-$year membership and a two$-$year membership. Assume both customers started using

the memberships on July $1,$ Year $1.$

a$.$ Determine the amount of income Kathy recognizes in Year $2$ from the one$-$year

contract

b$.$ Determine the amount of income Kathy recognizes in Year $2$ from the two$-$year

contract