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Calculating premium expense and inventory of premiums

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Question - Calculating premium expense and inventory of premiums for 2017 and 2018 can you please help me identify what numbers to use to calculate?

Waterway Company offers an MP3 download (seven-single medley) as a premium for every 6 candy bar wrappers presented by customers together with $3.20. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each download code to the company is $2.95. In addition, it costs 50 cents to distribute each code. The results of the premium plan for the years 2017 and 2018 are as follows. (All purchases and sales are for cash.)

 

2017

2018

MP3 codes purchased

330,000

435,600

Candy bars sold

2,996,000

2,887,200

Wrappers redeemed

1,584,000

1,980,000

2017 wrappers expected to be redeemed in 2018

382,800

 

2018 wrappers expected to be redeemed in 2019

 

462,000

Prepare the journal entries that should be made in 2017 and 2018 to record the transactions related to the premium plan of the Waterway Company.

Reference no: EM132430479

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