5. Consider the following balance sheet:
Cash $ 70,000Accounts payable $ 30,000
Accounts receivable 30,000Long-term debt 20,000
Inventories 50,000Common stock 200,000
Net fixed assets 350,000Retained earnings 250,000
Total assets $500,000Total claims $500,000
Assume that the business uses $30,000 of its cash to pay salaries. Which of the below statements reflects the resulting balance sheet change?
a. The cash account decreases by $30,000 and the long-term debt account is reduced by $30,000.
b. There is a change to the right-hand side only.
c. The cash account decreases by $30,000 and the retained earnings account is reduced by $30,000.
d. The company does not have the ability to pay $30,000 in salaries.
e. There is a change to the left-hand side only.
