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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

  1. 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 $600 ($600/12 = $50 per month); a two-year membership costs $1,152 ($1,152/24 = $48 per month). Cash payment is required at the beginning of the membership. On August 1, 2018, Kathy sold a one-year membership and a two-year membership. Determine the amount of income Kathy recognizes in 2019.

  1. $631
  2. $350
  3. $912
  4. $1,262

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