Assume that ibm leased equipment that was carried at a cost of $195,000 to sharon swander company. the term of the lease is 7 years beginning january 1, 2017, with equal rental payments of $33,816 at the beginning of each year. all executory costs are paid by swander directly to third parties. the fair value of the equipment at the inception of the lease is $195,000. the equipment has a useful life of 7 years with no salvage value. the lease has an implicit interest rate of 7%, no bargain-purchase option, and no transfer of title. collectibility is reasonably assured with no additional cost to be incurred by ibm. assume the direct-financing lease was recorded at a present value of $195,000. prepare ibm’s december 31, 2017, entry to record interest.

Magic realm, inc., has developed a new fantasy board game. the company sold 15,000 games last year at a selling price of $20 per game. fixed expenses associated with the game total $182,000 per year, and variable expenses are $6 per game. production of the game is entrusted to a printing contractor. variable expenses consist mostly of payments to this contractor.required: 1-a. prepare a contribution format income statement for the game last year.1-b. compute the degree of operating leverage.2. management is confident that the company can sell 58,880 games next year (an increase of 12,880 games, or 28%, over last year). given this assumption: a. what is the expected percentage increase in net operating income for next year? b. what is the expected amount of net operating income for next year? (do not prepare an income statement; use the degree of operating leverage to compute your answer.)