In the previous year, a firm failed to record premium amortization of $40,100 and $28,900, respectively, on its bonds payable and held to maturity bond investments. These errors affect both income before tax and taxable income. The firm's tax rate is 40%. As a result of this error, net income was: Understated by $33,380. Overstated by $6,720. Understated by $6,720. Overstated by $33,380.