Hypothetically, assume Target purchases paper towels for inventory with a cost of $$3,000,000.$ In addition, Target must pay for the shipping, with a cost of $$8,000.$ Target intends to sell this paper towel inventory to customers.

Target promises both the paper towel manufacturer and the shipping company that it will pay them in cash, $30$ days after they receive the goods.

How is the accounting equation affected when the paper towels arrive at Target's warehouse?

$1)$

Assets increase by $$3,008,000$ and liabilities increase by $$3,008,000$ and there is no change in Expenses or Equity.

$2)$

There is no change in assets, liabilities or expenses until Target pays for the paper towels and the shipping.

$3)$

Assets increase by $$3,008,000$ and Expenses increase by $$3,008,000.$

$4)$

Assets increase by $$3,000,000$ and Expenses increase by $$3,000,000.$ There is no change in Liabilities or Equity.