On April 1, a hardware retailer purchases inventory on account for $1,200. Which of the following correctly describes the effect of this transaction? Assume a perpetual inventory system is used. O A. Merchandise Inventory increases by $1,200 and Accounts Payable decreases by $1,200. B. Merchandise Inventory decreases by $1,200 and Accounts Receivable increases by $1,200. C. Merchandise Inventory increases by $1,200 and Accounts Payable increases by $1,200. OD. Merchandise Inventory decreases by $1,200 and Accounts Receivable decreases by $1,200