Platinum Fitness offers group classes and regular gym access The group classes are scheduled at 10AM, 1PM, 4PM, 7PM and 10PM each day, seven days a week, 52 weeks a year, except for ten (10) pre?announced holidays when the spa is closed The regular gym is open from 7AM until 11PM each day, and a member can arrive without an appointment, and may use a workout designed by the spa, or use his/her own program Memberships are sold as follows:
Term Regular Gym Group Classes
1 Year $ 180 $ 120
2 Year $ 300 $ 150
Basically, a member buys a membership to each amenity of the club, regular access and group classes
Franco purchases a two?year membership to both the gym and the group classes on March 1, 2017 Platinum Fitness records the income for financial statement purposes on a pro-rata basis
(a) Platinum Fitness operates as a calendar year, accrual basis taxpayer Franco purchases a 2 year membership on April 1, 2017 by paying cash of $450 How should Platinum Fitness account for this payment?
(b) Would your answers in (a) change if Platinum Fitness operated as a cash method taxpayer?
Use up to two pages for these answers Answers should be typed All answers must be explained Computations alone are not enough