Assume Smith & Jones, the accounting firm, advises Catch of the Day Seafood that its financial statement must be changed to conform to GAAP. At December 31, 2010, Catch of the Days accounts include the following:
Cash................................................................ $ 56,000
Short-term trading securities, at cost ............... 18,000
Accounts receivable......................................... 44,000
Inventory......................................................... 55,000
Prepaid expenses ............................................. 16,000
Total current assets......................................... $189,000
Accounts payable............................................ $ 58,000
Other current liabilities................................... 38,000
Total current liabilities.................................... $ 96,000
The accounting firm advised Catch of the Day that
Cash includes $24,000 that is deposited in a compensating balance account that will be tied up until 2012.
The market value of the trading securities is $11,000. Catch of the Day purchased the trading securities a couple of weeks ago.
Catch of the Day has been using the direct write-off method to account for uncollectible receivables. During 2010, Catch of the Day wrote off bad receivables of $5,500. Smith & Jones determines that uncollectible-account expense should be 3% of service revenue, which totaled $670,000 in 2010. The aging of Catch of the Days receivables at year-end indicated uncollectibles of $14,600.
Catch of the Day reported net income of $99,000 for 2010.

Requirements
1. Restate Catch of the Days current accounts to conform to GAAP. (Challenge)
2. Compute Catch of the Days current ratio and acid-test ratio both before and after your corrections.
3. Determine Catch of the Days correct net income for 2010. (Challenge)