On January 1, 2020, Lessor Inc., a manufacturer of machinery and equipment, leased equipment with a fair value of $ 300,000 to Lessee, Inc.The lessor correctly classified the lease as direct financing and recognized a deferred gross profit ) of $ 80,000. The implicit rate that the lessor charged the lessee is 11%, and the lessee knows it. What is the effect on the financial statements if as of December 31, 2020, the lessor prepared the journal entries with the amortization table under the effective interest method using only the 11% interest rate? Select one:

a. Net income will be underestimated.

b. The interest income will be overestimated.

c. The cost of the goods sold will be underestimated.

d. It cannot be determined with these data.