Consider the following balance sheet:
Cash
$70,000
Accounts payable $30,000
Accounts receivables
30,000
Long-term debt 20,000
Inventories
50,000
Common stock 200,000
Net fixed assets
350,000
Retained earnings 250,000
Total assets
$500,000
Total L+E
$500,000
Assume that the business uses $30,000 from its cash account to pay employee
salaries. Which of the following statements reflects the resulting balance sheet
change?
The cash account decreases by $30,000 and the retained earnings account is
reduced by $30,000
The cash account decreases by $30,000 and the inventory account is increased
by $30,000
The cash account decreases by $30,000 and the long term debt account is
increased by $30,000
The cash account decreases by $30,000 and the accounts receivables account is
reduced by $30,000