Curl Up & Dye Company sold merchandise costing $$2,400$ for $$3,800$ cash. The merchandise was later returned by the customer for a refund. If the perpetual inventory method is used, what effect will the sales return have on the accounting equation?

Multiple Choice

Total assets decrease by $$3,800$ and total stockholders$$ equity is decreased by $$2,400.$

Total assets and total stockholders$$ equity decrease by $$1,400.$

Total assets and total stockholders$$ equity increase by $$1,400.$

Total assets and total stockholders$$ equity decrease by $$3,800.$