Metlock Corporation sells Sugar Frosted Cocoa Bombs, a childrens breakfast cereal. As a promotion, Metlock offered its customers a free music CD in exchange for 4 boxtops plus $2.00. The CD cost Metlock $3.25. Metlock estimated that 80% of its customers would redeem boxtops for this promotion.

Metlock purchased 10,600 CDs at the start of the promotion in November, 2020. 128,000 boxes of cereal were sold during November and December, 2020, and Metlocks year-end was December 31. Prior to the end of the fiscal year, 9,600 customers took advantage of the offer.

Metlock follows ASPE and uses the expense approach to account for its premiums.

Required

a) Prepare the journal entry to record the purchase of the promotional CDs.

b) Prepare the journal entry to record the redemption by 9,600 customers.

c) Prepare the journal entry to record the year-end accrual entry for estimated premium expense.