Larkspur Company offers an MP3 download (seven single medley) as a premium for every 5 candy bar wrappers presented by customer togethereith $3.50. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each download code to the company is $3.25. In addition it costs 50 cents to distribute each code. The results of the premium plan for the years 2017 and 2018 are as follows.

2017. 2018

MP3 codes purchased. 360000. 475200

Candy bars sold 2825000. 2546500

Wrappers redeemed. 1728000. 2160000

2017 wrappers expected 417600

to be redeemed in 2018

2018 wrappers expected 504000

to be redeemed in 2019

a. Prepare the journal entries that should be made in 2017 and 2018 to record the transactions related to the premium plan of the Larkspur Company.

b. Indicate the amounts for each accounts and classifications of the items related to the premium plan that would appear on the balance sheet and the income statement at the end of 2017 and 2018.