At the end of December, Campfire Company forgot to record adjusting entries for the year 1. What are the impacts on Campfire Company's Year 1 financial statements for failing to record the adjusting entry below? (Overstated, Understated, No Effect)

Failed to record $2,000 of wage expense the company incurred in December Year 1 but will be paid in January Year 2.

Assets: Understated, Overstated, No effect

Liabilities: Understated, Overstated, No effect

Equity: Understated, Overstated, No effect

Net Income: Understated, Overstated, No effect