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 purchased 750000 820000

candy bars sold 5600000 6760000

wrappers redeemed 2700000 6760000

2017 wrappers expected to be redeemed in 2018 1900000

2018 wrappers expected to be redeemed in 2019 2680000

part 1

Prepare the general journal entries that should be made in 2017 and 2018 related to the above plan by Kane Candy

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 redemption of wrappers in 2018)

2018

(to record purchase of coffee mugs)

(to record sale of candy bars)

2018

(To record coffee mugs offered for wrappers redeemed)

2018

(to record liabiltu against expected redemption of wrapper in 2019)

Part 2

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 Name Class 2017

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Income statement

Account Name Class 2017

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