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Effect of net income on a firm’s balance sheet Conrad Air Inc.reported net income of $1,365,000 for the year ended December 31,2020. Show how Conrad’s balance sheet would change from 2019 to2020 depending on how Conrad “spent” those earnings as described inthe scenarios that appear below.Conrad Air Inc. Balance Sheet as of December 31, 2019Assets CashMarketable securities Accounts receivable InventoriesCurrent assetsEquipment BuildingsFixed assets Total assets$ 120,000 35,000 45,000$ 130,000 $ 330,000 $2,970,000 1,600,000 $4,570,000$4,900,000Liabilities and Stockholders’ Equity Accounts payableShort-term notes Current liabilities Long-term debt TotalliabilitiesCommon stock Retained earningsStockholders’ equity Total liabilities and equity$ 70,000 55,000$ 125,000 2,700,000 $2,825,000 $ 500,000 1,575,000 $2,075,000$4,900,000a. Conrad paid no dividends during the year and invested the fundsin marketable securities.b. Conrad paid dividends totaling $500,000 and used the balance ofthe net income to retire (pay off) long-term debt.c. Conrad paid dividends totaling $500,000 and invested the balanceof the net income in building a new hangar.d. Conrad paid out all $1,365,000 as dividends to itsstockholders.