Kane Candy Company sells candy bars for $1 each. In addition, Kane offers its customers a coffee mug in exchange for $2 and 10 candy wrappers. A coffee mug costs Kane $2.40, and the company estimates that customers will redeem 60 percent of the candy wrappers. During 2020, Kane purchased 720,000 mugs, sold 5,600,000 candy bars, and redeemed 2,800,000 candy wrappers.

Instructions:

1. Prepare the journal entry to record the purchase of the coffee mugs.
2. Prepare the entry to record the sale of the candy bars.
3. Prepare the entry to record the redemption of candy wrappers, the receipt of $2 per 10 wrappers, and the delivery of the coffee mugs.
4. Prepare the adjusting entry to record additional premium expense and the estimated premium liability at Dec. 31, 2020.