#7

To stimulate the sales of its Alladin breakfast cereal, Waterway Company places 1 coupon in each box. 6 coupons are redeemable for a premium consisting of a children's hand puppet. In 2026, the company purchases 46,600 puppets at $1.65 each and sells 588,000 boxes of Alladin at $3.90 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 2026,132,600 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 "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries.)