Question: Journalizing Transactions Involving Warranties During 2008, Bull Manufacturing Inc. (BMI) sold 30,000 lawnmowers with a two-year warranty. The company's production manager estimated that 5 percent of the lawnmowers would require warranty repairs at an average cost of $100 per unit. BMI outsources the warranty work to repair companies and incurred $100,000 in repair costs during 2008, all of which were paid in cash.
Required: 1. What is the total estimated cost of warranty repairs for sales made during 2008?
2. Give the journal entries to record these events.
3. If BMI's estimate is accurate, what total repair cost is yet to be incurred for the lawnmowers sold in 2008?