What effects on a retail store's accounting equation occur when merchandise returned by customers is recorded?

Question

Quizplus · Accepted Answer

When merchandise is returned by customers, the store's assets (inventory) decrease because the store takes back the merchandise. Simultaneously, the store's stockholders' equity decreases because the store must refund the customer or reduce the customer's accounts payable, impacting the store's net income and retained earnings.

What Effects on a Retail Store's Accounting Equation Occur When