Kane Candy Company offers a coffee mug as a premium for every ten $1 candy bar wrappers presented by customers together with $2. The purchase price of each mug to the company is $1.80; in addition it costs $1.20to mail each mug. The results of the premium plan for the years 2017 and 2018 are as follows (assume all purchases and sales are for cash):

2017

2018

Coffee mugs purchased730,000820,000Candy bars sold

5,700,0006,720,000Wrappers redeemed

2,800,0004,190,0002017 wrappers expected to be redeemed in 2018

2,100,0002018 wrappers expected to be redeemed in 20192,660,000

Part 1

Prepare the general journal entries that should be made in 2017 and 2018 related to the above plan by Kane Candy.(Credit account titles are automatically indented when the amount is entered.Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

2017

(To record purchase of coffee mugs)2017

(To record sale of candy bars)2017

(To record coffee mugs offered for wrappers redeemed)2017

(To record liability against expected redemption of wrappers in 2018)2018

(To record purchase of coffee mugs)2018

(To record sale of candy bars)2018

(To record coffee mugs offered for wrappers redeemed)2018

(To record liability against expected redemption of wrappers in 2019)

Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the Kane Candy Company balance sheet and income statement at the end of 2017 and 2018.

Balance Sheet

Account NameClass20172018

Current Liability

Operating Income

Operating Expense

Current Asset

$$

Current Asset

Operating Income

Operating Expense

Current Liability

$$

Income Statement

Account NameClass20172018

Current Asset

Operating Income

Current Liability

Operating Expense

$$