Problem: On June 15, 2003 Greer Corporation accepted delivery of merchandise which it purchased on account. As of June 30 Greer had not recorded the transaction or included the merchandise in its inventory. The effect of this error on its balance sheet for June 30, 2003 would be
1. assets and stockholders' equity were overstated but liabilities were not affected.
2. stockholders' equity was the only item affected by the omission.
3. assets and liabilities were understated but stockholders' equity was not affected.
4. assets and stockholders' equity were understated but liabilities were not affected.