Easter Bunny Corporation prepared its annual financial statements for its shareholders for the fiscal year ending December 31, 2018. Record whether the transaction below for Easter Bunny Corporation overstated (O), understated (U), or correctly stated (C) total assets, total liabilities, stockholders' equity, and net income in 2018.

On November 1, 2018, Easter Bunny Corporation borrowed $8,000 on a six-month, 9% note payable. Easter Bunny correctly recorded the borrowing on November 1. On December 31, 2018, Easter Bunny made an adjusting entry for this note by debiting interest payable for $120 and crediting interest expense for $120.

Assets

Liabilities

Equity

Net income

Please explain the reasoning