The correct answer is indeed option 2. Here`s why:

Option A: British Columbia is not in the USA (as stated in option 1). It is a part of Canada, so it matches with 3, as given in Option 2.

Option B: Bavaria is not in the UK (as stated in option 2). It is actually a state in Germany, matching with 4 as in Option 2.

Option C: Gibraltar is not in Denmark (as stated in option 5). Gibraltar is an overseas territory of the UK, matching with 2, as provided in Option 2.

Option D: Rhode Island is not in Canada (as stated in option 3). It is a state in the USA, matching with 1 as in Option 2.

Thus, option 2 (A-3, B-4, C-2, D-1) correctly matches each state/province/overseas territory to its respective country.