1. Provide accrual basis net income for each of the following. Use the minus sign to indicate a loss.?

Question

I need YEAR 1, 2 and 3 Accrual Basis Net Incomes!
Hathaway Health Club sold three-year memberships at a reduced rate during its opening promotion. It sold 1,000 three-year, nonrefundable memberships for $366 each. The club expects to sell 100 additional three-year memberships for $900 each over each of the next two years. Membership fees are paid when clients sign up. The club's bookkeeper has prepared the following income statement for the first year of business and projected income statements for Years 2 and 3.
Year 1 Year 2 Year 3
Sales: $366,000 $90,000 $90,000
Equipment: $100,000 $0 $0
Salaries and Wages: $50,000 $50,000 $50,000
Advertising: $5,000 $5,000 $5,000
Rent and Utilities: $36,000 $36,000 $36,000
HELP!

Answer 1

Net Income should be as follows:
Year 1
Revenue
1/3 x $366,000 = $122,000
Less:
Operating Expenses
Depreciation $20,000 (assume 5 yrs useful life)
Salaries $50,000
Advertising $5,000
Rent $36,000
Net Income : $11,000

Year 2
Revenue
1/3 x $366,000 = $122,000
1/3 x $90,000 = $30,000
Less:
Operating Expenses
Depreciation $20,000 (assume 5 yrs useful life)
Salaries $50,000
Advertising $5,000
Rent $36,000
Net Income : $41,000

Year 3
Revenue
1/3 x $366,000 = $122,000
1/3 x $90,000 = $30,000
1/3 x $90,000 = $30,000
Less:
Operating Expenses
Depreciation $20,000 (assume 5 yrs useful life)
Salaries $50,000
Advertising $5,000
Rent $36,000
Net Income : $71,000

The equipment of $100k should not be in the income statement but you didn't say what was the useful life, so I assumed 5 yrs.