Prepaid Income
Response to the following problem:
Scott operates a fitness center as a sole proprietorship. On May 1, 2014, Scott sells a 24-month membership for $1,200.
a. How much of the $1,200 must Scott report on his 2014-2016 tax returns if he uses the accrual method of accounting?
b. How would your answer to Part a. change if Scott uses the cash method?