Ndecember 31, 2020, wolfe-bache corporation failed to accrue salaries expense of $1,800. in january 2021, when it paid employees for the december 27–january 2 workweek, wolfe-bache made the following entry: salaries expense 2,520 cash 2,520 on the last day of 2020, midwest importers received a $90,000 prepayment from a tenant for 2021 rent of a building. midwest recorded the receipt as rent revenue. the error was discovered midway through 2021. at the end of 2020, dinkins-lowery corporation failed to accrue interest of $8,000 on a note receivable. at the beginning of 2021, when the company received the cash, it was recorded as interest revenue.

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.)