Adrian Inc. sells computer monitors with a one-year warranty. Warranty costs are expected to average 6% of sales. Sales for 2017 (the first year of operations for Adrian) were $1,400,000 and actual warranty repairs in 2017 totaled $56,000. What amount of warranty liability should Adrian report on its balance sheet as at December 31, 2017? 21. a) $28,000. b) $56,000 c) $84,000. d) $140,000. e) none of the above. Levy Ltd's financial statement ratios show that its accounts receivable turnover increased in 2017, relative to 2016. From this information, the reader can conclude that: 22. a) b) c) d) c) Levy has become more profitable in 2017 On average, Levy's customers are paying more quickly in 2017. Levy's accounts receivable have declined during 2017 b and c none of the above. 23. The bookkeeper of Harnett Ltd has just written off as uncollectible an account receivable worth $2,000. If Harnett uses the allowance method, this write-off will: a) b) c) d) e) decrease Harnett's current ratio and quick ratio. increase Harnett's asset turnover ratio. decrease Harnett's earnings per share a, b and c. have no effect on Harnett's financial ratios. Hale Ltd renews its annual insurance policy every year on April 1. Hale paid insurance premiums of $2,400 in 2016, and $3,200 in 2017. What is insurance expense for the fiscal year ending December 31, 20171 24. a) $2,400. b) $2,800. c) $3,800. d) $5,600. e) None of the above Ending inventory for the year ended December 31, 2016, is understated. Under a periodic inventory system, this error will cause shareholders' equity to be: 25. a) overstated at the end of 2016 and understated at the end of 2017. b) understated at the end of 2016 and overstated at the end of 2017 c) correctly stated at the end of 2016 and overstated at the end of 2017. d) understated at the end of 2016 and correctly stated at the end of 2017. e) none of the above On January 1, Bernard Ltd declared a 2-for-1 stock split. What effect will this event have on Bernard's financial ratios for the year? 26. a) Increase the company's dividend yield b) Decrease the company's earnings per share. c) Increase the company's asset turnover ratio d) a and b. e) None of the above