Y-B-2 IncPays Its Rent of $90,000 Annually on January 1

Multiple Choice

Y-B-2 Inc.pays its rent of $90,000 annually on January 1.If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following will be true?

A) Failure to make the adjustment does not affect the February financial statements.
B) Expenses will be overstated by $7,500 and net income and equity will be understated by $7,500.
C) Assets will be overstated by $15,000 and net income and equity will be understated by $15,000.
D) Assets will be overstated by $7,500 and net income and equity will be overstated by $7,500.