Answer:
c. $180 in 2019
Explanation:
The entity employs the accrual accounting method, where revenues are documented on the income statement once earned, regardless of the actual receipt of cash.
On July 1, 2017, the organization sold one-year and two-year memberships. In 2017, The Maroon & Orange Gym, Inc. delivered services for half a year for each contract.
Gross income from one-year membership in 2017 = $40 x 6 = $240
Gross income from two-year membership in 2017 = $30 x 6 = $180
Overall revenue = $240 + $180 = $420
In 2018, the company continued providing services for the remaining 6 months of the one-year membership and the entire 12 months of the two-year membership.
Gross income for the one-year membership in 2018 = $40 x 6 = $240
Gross income from two-year membership in 2018 = $30 x 12= $360
Total income = $240 + $360 = $600
In 2019, the company wrapped up services for the last 6 months of the two-year membership.
Gross income in 2019 = $30 x 6= $180