Leland Corporation sells DVD players. The corporation also offers its customers a 4-year service-type warranty contract. On 1/1/17, Leland sold 10,000 warranty contracts at $50 each; Leland spent $45,000 serving warranties during 2017 and 65,000 serving warranties in 2018. Estimated warranty expense for four-year period is $400,000. The Sales warranty (Deferred Revenue) approach is applicable. Assume straight-line amortization.

What is the effect on 2018 Net Income? (provide process)