Sycamore Candy Company offers a CD single as a premium for every 5 candy bar wrappers presented by customers together with $2.80. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each CD to the company is $2.55; in addition, it costs 50 cents to mail each CD. The results of the premium plan for the years 2012 and 2013 are as follows. (All purchases and sales are for cash.)
CDs purchased 355,000 468,600
Candy bars sold 2,986,100 2,764,400
Wrappers redeemed 1,704,000 2,130,000
2012 wrappers expected to be redeemed in 2013 411,800
2013 wrappers expected to be redeemed in 2014 497,000
(a) Prepare the journal entries that should be made in 2012 and 2013 to record the transactions related to the premium plan of the Sycamore Candy Company.