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:

Cash................................................................... $77,000
Accounts receivable........................................... 39,000
Inventory............................................................. 59,000
Prepaid expenses ................................................ 9,000
Total current assets ...................................... $184,000
Accounts payable ............................................ $62,000
Other current liabilities .................................... 42,000
Total current liabilities ................................. $104,000

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.

Requirements

1. Restate Lakeside’s current accounts to conform to GAAP. 

2. Compute the company’s current ratio and quick (acid-test) ratio both before and after your correction.

3. Determine the company’s correct net income for 2018.