In June, X Company purchased some equipment with $200,000 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 Junebalance sheet,

Total assets were understated. Cash was understated.

Inventories were overstated. Accounts Payable was understated.

Total liabilities were understated. Retained Earnings was overstated.