Assume Beta Company Uses the Perpetual Inventory Method and Engaged

Assume Beta Company uses the perpetual inventory method and engaged in the following transactions:
1) Purchased $5,000 of merchandise on account under terms 2/10, n/30.
2) Returned $600 (list price) of merchandise to the supplier before payment was made.
3) Paid the account payable within the discount period.
4) Sold the merchandise for $6,500 cash.
What effect does the return of merchandise to the supplier have on the accounting equation?

A) Assets and equity are reduced by $600.
B) Liabilities and assets are reduced by $600.
C) Assets and liabilities are reduced by $588.
D) Liabilities and equity are reduced by $600.