Consider the following balance sheet:

Cash $70,000

Accounts receivable $30,000

Inventories $50,000

Net fixed assets $350,000

Total assets $500,000

Accounts payable $30,000

Long-term debt $20,000

Common stock $200,000

Retained earnings $250,000

Total liabilities and equity $500,000

Assume that the business uses $30,000 of its cash to pay salaries.

Which of the following statements reflects the resulting balance sheet change?

1) There is a change to the left-hand side only.

2) There is a change to the right-hand side only.

3) The cash account decreases by $30,000, and the retained earnings account is reduced by $30,000.

4) The cash account decreases by $30,000, and the long-term debt account is reduced by $30,000.

5) The company does not have the ability to pay $30,000 in salaries.