(TCO D) Tangy Candy Company offers a coffee mug as a premium for every ten 50-cent candy bar wrappers presented by customers together with $1.00. The purchase price of each mug to the company is 90 cents; in addition it costs 60 cents to mail each mug. The results of the premium plan for the years 2006 and 2007 are as follows (assume all purchases and sales are for cash) 2006 2007

2006 wrappers expected to be redeemed in 2007 2,000,000
2007 wrappers expected to be redeemed in 2008 2,700,000
Prepare the journal entries that should be made in 2006 and 2007 related to the above plan by TangyCandy

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Coffee mugs purchased Candy bars sold Wrappers redeemed 720,000 5,600,000 2,800,000 800,000 6,750,000 4,200,000