In packages of the products, Curran Company included coupons that may be presented at retail stores to obtain discounts.

Retailers are reimbursed for the face amount of coupons redeemed plus 10% of that amount for handling costs.

The entity granted requests for coupon redemption by retailers up to three months after the consumer expiration date.

The entity estimated that 70% of all coupons issued will ultimately be redeemed.

Consumer expiration date December 31, 2020

Total face amount of coupons issued 600,000

Total payments to retailers as of December 31, 2020 220,000

1. What amount should be reported as premium expense for 2020?

a. 600,000

b. 180,000

c. 462,000

d. 198,000

2. What amount should be reported as liability for unredeemed coupons on December 31, 2020?

a. 308,000

b. 200,000

c. 242,000

d. 0