Andrews Company Sold Merchandise with a Cost of $500 to a Customer

Andrews Company sold merchandise with a cost of $500 to a customer for $800 on account. Due to an error, this sale was never recorded in the accounting records. What effect will the failure to make the necessary entries have on the company's accounting equation?

A) Total assets and total equity will be understated.
B) Total assets will be overstated and total equity will be understated.
C) Total assets and total equity will be overstated.
D) The accounting equation will not be affecteD.If the company fails to record the sale of merchandise on account, assets and equity would be understated by the difference between the cost of the merchandise and its selling price.