Impact of Inventory Adjustment on Balance Sheet

Skyline Realty Group is assessing its financial position based on its most recent balance sheet dated December 31, 2023. During the audit, the following information was presented:

- Total Assets: $3,000,000

- Total Liabilities: $1,800,000

- Inventory: $250,000

- Cash: $500,000

- Accounts Payable: $300,000

- Shareholders’ Equity: $1,200,000

Upon reviewing the balance sheet, Skyline Realty Group noticed discrepancies regarding their inventory valuation, which they initially reported at $300,000 but had received an adjustment reducing it by $50,000. How would this adjustment affect the total liabilities and shareholders’ equity on the balance sheet?