In January, X Company purchased some equipment with $100,000 that it borrowed from a local bank. The accountant recorded the transaction as an increase in Inventories and an increase in Accounts Payable 

As a result, on the January balance sheet, 

Accounts Payable was understated. 

Cash was understated. 

Retained Earnings was overstated. 

Total liabilities were understated. 

Total assets were understated. 

Inventories were overstated.