Referring to Case Study $1$ for The Edge Business Consultants, Inc.: If a $$25,000$ non$-$wage distribution was made to each shareholder, how would the balance sheet be affected?

Cash would be increased to $$220,337$ and retained earnings would be increased to $$305,408.$

Cash would be increased to $$220,337,$ which in turn would decrease retained earnings to $$205,408.$

Cash would be reduced to $$120,337,$ which in turn would increase retained earnings to $$305,408.$

Cash would be reduced to $$120,337$ and retained earnings would be reduced to $$205,408.$