Ajay is a financial manager inside a bank. During the first quarter of the pandemic, the bank experienced significant increases on the loans predicted to default. In order to recognize such losses, Amanda decided to increase the reserve for loan losses by $90M. Jessica was wondering how this (single) change affects the assets and the gross loans in the banks balance sheet.

Group of answer choices

Assets do not change. Gross loans drop by $90M.

Assets increase by $90M. Gross loans do not change.

Assets drop by $90M. Gross loans do not change.

Assets drop by $90M. Gross loans drop by $90M.

Assets do not change. Gross loans do not change.