Prepare the journal entries that should be recorded

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Reference no: EM131220247

To stimulate the sales of its Alladin breakfast cereal, Loptien Company places 1 coupon in each box. 5 coupons are redeemable for a premium consisting of a children’s hand puppet. In 2015, the company purchases 46,200 puppets at $1.70 each and sells 462,000 boxes of Alladin at $3.95 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 2015, 140,500 coupons are presented for redemption.

Prepare the journal entries that should be recorded in 2015 relative to the premium plan.

Reference no: EM131220247

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