On April 1, 2020, Rare Finds Bookstore paid for an insurance policy costing $24,000 in cash that would insure the retail building for two years against fire loss. The company accounted for this transaction on April 1, 2020 by recording a prepaid asset. If no additional accounting entries related to the transaction are made before the financial statements are prepared as of December, 31, 2020, Rare Finds Bookstore will report:

Multiple Choice

assets that are overstated by $9,000.

assets that are understated by $9,000.

net income that is overstated by $15,000.

net income that is understated by $15,000.

contributed capital that is overstated by $9,000.