On January 1, 2007, Guardiola, Inc. sold 8% bonds with a face value of $600,000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold to yield 10%. The applicable income tax rate is 35%. If the appropriate entry on June 30, 2007 is made, but the entry on December 31, 2007 is skipped, net income for 2007 will be:

A. $18,114 overstated.

B. $18,114 understated.

C. $15,600 overstated.

D. $15,600 understated .