3. Cost of goods sold represents an outflow of a resource, inventory, which is caused by the sale of products. a. True b. False 5. During Year 3, Great Adventures sold 150 dune buggies for $4,000 each. The dune buggies carry a five-year warranty for defects. Estimates are that repair costs will average 4% of the total selling price. The warranty liability at the beginning of the year was $14,000, and $20,000 in claims was actually incurred during Year 3 to honour warranties. What was the warranty expense for Year 3? a. $8,000 b. $14,000 c. $20,000 d. $24,000