Assume Killough & Kirkland, the accounting firm, advises Beachfront Seafood Sales that its…

Assume Killough & Kirkland, the accounting firm, advises Beachfront Seafood Sales that its…

Assume Killough & Kirkland, the accounting firm, advises Beachfront Seafood Sales that its financial statement must be changed to conform to GAAP. At December 31, 2014, Beachfront’s accounts include the following:Cash………………………………………………………. $15,000Investment in Trading Securities, at cost……… 9,000Accounts receivable………………………………….. 31,000Inventory………………………………………………… 28,000Prepaid expenses……………………………………… 7,000Total current assets………………………………. $90,000Accounts payable…………………………………… $30,000Other current liabilities……………………………. 19,000Total current liabilities………………………….. $49,000The accounting firm advised Beachfront of the following:■ Cash includes $4,000 that is deposited in a compensating balance account that will be tied up until 2016.■ The market value of the trading securities is $8,700. Beachfront purchased the trading securities a couple of weeks ago.■ Beachfront has been using the direct write-off method to account for uncollectible receivables. During 2014, Beachfront wrote off bad receivables of $600. The aging of Beachfront’s receivables at year-end indicated uncollectibles of $2,400.■ Beachfront reported net income of $54,000 for 2014.Requirements1. Restate Beachfront’s current accounts to conform to GAAP. (Challenge)2. Compute Beachfront’s current ratio and quick (acid-test) ratio both before and after your corrections.3. Determine Beachfront’s correct net income for 2014. (Challenge)View Solution:
Assume Killough Kirkland the accounting firm advises Beachfront Seafood

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