Rhodes Co. manages a school for the Old England School District. In year 1, Rhodes Co.’s first year of operating the school, the school earned per pupil fees of \($100,000.\) Rhodes is responsible for teacher salaries and is considered to be the primary obligor for the salaries. However, the school district paid the teachers’ salaries of \($70,000\) and paid Rhodes the net amount of \($30,000\) in respect of year 1 operations. Rhodes incurred other administrative expenses of \($10,000\) for the year (ignoring taxes), which it paid itself.

Required

a. What is the amount of revenue that Rhodes should report in its income statement for year 1 in accordance with EITF 01-14?

b. What is the amount of Rhodes Co.’s net income for year 1?