To stimulate the sales of its Alladin breakfast cereal, Loptien Company places 1 coupon in each box. 5 coupons are redeemable for apremium consisting of a children's hand puppet. In 2026, the company purchases 40,000 puppets at $1.50 each andsells 480,000 boxes of Alladin at $3.75 a box. From its experience with other similar premium offers, the company estimates that 40%of the coupons issued will be mailed back for redemption. During 2026, 115,000 coupons are presented for redemption.Prepare the journal entries that should be recorded in 2026 relative to the premium plan. (If no entry is required, select "NoEntry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amountis entered. Do not indent manually. List all debit entries before credit entries.)Account Titles and ExplanationPremium InventoryCash(To record purchase of puppets)CashSales Revenue(To record the sales)Premium ExpensePremium Inventory(To record redemption of coupons)Premium ExpensePremium Liability(To record a liability for premiums)Debit60000180000028750163250Credit60000180000028750163250

Journal entry:The recording of the business transactions in the books of account is known as journal…

Answered: To stimulate the sales of its Alladin…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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