1. On January 1^st, 2014, Euston Plc. obtained a 3-year bank loan in the amount of $100,000. The principal and interest compounded at an annual rate of 10% are due on December 31^st, 2016. Euston did not record any transactions related to this loan. In addition, Euston failed to record $2,000 of interest earned on investments and the payment of $5,000 of salaries that had previously been accrued. As a result, net income for the fiscal year ended December 31^st, 2014 is (overstated, understated, correct) and if wrong by how much: