Keiasia Coates Company sold merchandise for $2,000. The cost of the merchandise was $1,500. Five days later, the customer returns 20% of the merchandise, which is defective, and is not restored to...

Keiasia Coates Company sold merchandise for $2,000. The cost of the merchandise was $1,500. Five days later, the customer returns 20% of the merchandise, which is defective, and is not restored to Keasia Company’s merchandise inventory. On day 10, the customer sends a check for the amount due. Assuming the net method, indicate how these transactions combined would affect the following five financial statement items: assets, liabilities, owners equity, revenue, and expenses?

Answer: assets:increase, Liabilities: decrease, owners equity:increase, revenue:increase, expenses: increase

why and how would liabilites be decreased in this scenario? explain process to answer of this problem