Healthy Nuts Co. includes one coupon in each bag of bird seed it sells. In return for 3 coupons, customers receive a bird house that the company purchases for $2 each. Healthy Nuts' experience indicates that 60 percent of the coupons will be redeemed. During 2020, 114,000 bags of bird seed were sold, 14,000 bird houses were purchased, and 45,000 coupons were redeemed. During 2021, 135,000 bags of bird seed were sold, 18,000 bird houses were purchased, and 70,000 coupons were redeemed.

Instructions Determine the premium expense to be reported in the income statement and the premium liability on the balance sheet for 2020 and 2021.