Fred received merchandise on consignment from Dino on January 28th. As at January 31, Fred did NOT record the transaction and none of the goods had been sold by Fred. The effect of this on Fred's financial statements for January 31 would be

net income, current assets, and retained earnings were understated.

net income was correct and current assets were understated.

net income, current assets and current liabilities were correctly reported.

net income, current assets, and retained earnings were overstated.