Assume Deloitte & Touche, the accounting firm, advises Pappadeaux Seafood that Pappadeaux's financial statements must be changed to conform to IFRS. At December 31, 2017, Pappadeaux's accounts include the following:

Cash.......................................................................................................... $ 51,000

Short-term trading investments................................................................... 17,000

Accounts receivable.................................................................................... 37,000

Inventory.................................................................................................... 61,000

Prepaid expenses........................................................................................ 14,000

Total current assets................................................................................ $180,000

Accounts payable................................................................................... $ 62,000

Other current liabilities............................................................................. 41,000

Total current liabilities.......................................................................... $103,000

Deloitte & Touche advised Pappadeaux that:

• Cash includes $20,000 that is deposited in a restricted account that is tied up until 2019.

• Pappadeaux did not estimate their uncollectible accounts but rather wrote them off when they found out that the customer could not pay them. During 2017, Pappadeaux wrote off bad receivables of $7,000. Deloitte & Touche determines that bad debt expense for the year should be for 2017 should be $15,000 based on the allowance method.

• Pappadeaux reported net income of $92,000 in 2017.

Requirements

1. Restate Pappadeaux's current accounts to conform to IFRS.

2. Compute Pappadeaux's current ratio and acid-test ratio both before and after your corrections.

3. Determine Pappadeaux's correct net income for 2017.

4. How does using the allowance method to estimate uncollectible accounts benefit the investors and creditors?