Total Premium expense can be calculated as

Boxes sold $=1200000$

X total estimated redemption $=30\%$

Total UPC expected to be redeemed $=360000$

Now $3$ UPC must be redeemed for each set of building block

i$.$e $=360000$ UPC $/3,=120000$ Blocks expected to be claimed

cost of each block set $=$

cost of purchase $=1\mathrm{.}10$

$+$ Cost of mail $=0\mathrm{.}60$

$-$ amount sent by customers $=0\mathrm{.}50$

Net cost per building block $=1\mathrm{.}10+0\mathrm{.}60-0\mathrm{.}50,=1\mathrm{.}20$ per block

Total Premium expense $=120000$ Blocks x $1\mathrm{.}20$ Block $,=144000$

Actual Upc redeemed $=120000$ UPC

Amount received from customers $=120000$ UPC $/3$ UPC x $0\mathrm{.}50,=20000$

$($For Every $3$ UPC $=50$ cents$)$

Total Number of Building blocks mailed $=120000/3,=40000$ Blocks

$($ for every $3$ upc $1$ block$)$

Cost of mailing block $=40000$ Block x $60$ cents $=24000$

Net cash otflow $=24000-20000,=4000$

Cost of purchasing $40000$ blocks $=40000$ x $1\mathrm{.}10,=44000($ Inventory on premium$)$

Total cost of $40000$ building blocks is $=40000$ x $1\mathrm{.}20($calculated above$),=48000$

Entry at end to record current year expense

Premium Expense $48000$

Inventory on Premium $44000$

Cash $4000$

Further there will be $1$ more entry to record remaining expected premium expense of $96000(144000-48000)$

Premium Expense $96000$

Estimated Liability for premium expense $96000$