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McClinton and Jefferson, an accounting firm, advises Lakeside Seafood that its financial statement must be changed to conform to GAAP. At December 31, 2018, Lakeside’s accounts include the following:
The accounting firm advised Lakeside of the following:
Lakeside has been using the direct write-off method to account for uncollectible receivables. During 2018, the company wrote off bad receivables of $8,500. The aging of Lakeside’s receivables at year-end indicated uncollectibles of$23,500.
Lakeside reported net income of $93,000 for 2018.
Restate Lakeside’s current accounts to conform to GAAP.
Compute the company’s current ratio and quick (acid-test) ratio both before and after your correction.
Determine the company’s correct net income for 2018.