Agnes bought some items of inventory on credit. She subsequently returned a defective item, which cost $250. How are her liabilities and equity affected by the return? \begin{tabular}{ll} Liabilities & \multicolumn{1}{c}{ Equity } \\ \hline reduced by $250 & reduced by $250 \\ \hline reduced by $250 & increased by $250 \\ \hline no change & increased by $250 \\ \hline reduced by $250 & no change \end{tabular}