Rice Company Sold Merchandise Costing $1,600 for $2,500 Cash

Rice Company sold merchandise costing $1,600 for $2,500 cash. All of the merchandise was later returned by the customer. If the perpetual inventory method is used, what effect will the sales return have on the accounting equation?

A) Total assets and total equity increase by $900.
B) Total assets increase by $1,600 and total equity is decreased by $2,500.
C) Total assets and total equity decrease by $2,500.
D) Total assets and total equity decrease by $900.