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,

Retained Earnings was overstated

. Accounts Payable was understated.

Inventories were overstated.

Total assets were understated.

Total liabilities were understated.

Cash was understated.

Which one? Please help.