Reverse Course Inc. (RCI) was incorporated January 1, 2007. In preparing the 2010 financial statements, the following errors were discovered: 31/12/09 31/12/10 Prepaid rent $ 9,000 too high $ 8,000 too low Unearned revenue 18,000 too high 20,000 too high Ending inventory 60,000 too low 48,000 too high 4. The total effect of the errors on RCIs 2010 net income is to a. overstate income by $3,000 b. understate income by $31,000 c. overstate income by $89,000 d. understate income by $16,800