Roe Company Purchased Merchandise on Account from Rodriguez Company on December

Roe Company purchased merchandise on account from Rodriguez Company on December 12,Year 1.On December 13,Year 2,Roe Company returned damaged merchandise to Rodriguez Company and was granted an adjustment on its account.Roe Company uses the periodic inventory system.What effect does the merchandise return have on Roe Company's accounting equation?

A) Assets and shareholders' equity decrease.
B) Assets and liabilities decrease.
C) Liabilities decrease and shareholders' equity increases.
D) Liabilities and shareholders' equity decrease.