While reviewing the books of JB HI FIVE Ltd you discover that no adjusting entry was made for estimated bad debts traceable to sales in 2020 (the company's first year of operation). Assuming this error is not corrected, which of the following is true at year-end 2020?

Select one:

Assets are understated, profit is overstated

Liabilities are overstated, profit is understated

Assets are overstated, profit is overstated

Assets are correct, profit is overstated