Greencroft Company sold merchandise costing $3,700 for $6,400 cash. The merchandise was later returned by the customer for a refund. If the perpetual inventory method is used, what effect will the sales return have on the accounting equation? Total assets and total equity decrease by $2,700. Total assets and total equity decrease by $6,400. Total assets decrease by $6,400 and total equity is decreased by $3,700. Total assets and total equity increase by $2,700.

Greencroft Company sold merchandise costing $3,700 for $6,400 cash. The merchandise was later returned by the customer for a refund. If the perpetual inventory method is used, what effect will the sales return have on the accounting equation?

Total assets and total equity decrease by $2,700.

Total assets and total equity decrease by $6,400.

Total assets decrease by $6,400 and total equity is decreased by $3,700.

Total assets and total equity increase by $2,700.

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