If a company receives $12,200 from the stockholders to establish a corporation, the effect on the accounting equation would be:

Assets increase $12,200 and liabilities decrease $12,200.

Assets increase $12,200 and equity increases $12,200.

Liabilities increase $12,200 and equity decreases $12,200.

Assets decrease $12,200 and equity decreases $12,200.

Assets increase $12,200 and liabilities increase $12,200.