Kingbird Music Emporium carries a wide variety of musical instruments, sound reproduction equipment, recorded music, and sheet music. Kingbird uses two sales promotion techniqueswarranties and premiums$-$to attract customers.

Musical instruments and sound equipment are sold with a $1-$year warranty for replacement of parts and labor. The estimated warranty cost, based on past experience, is $1\%$ of sales.

The premium is offered on the recorded and sheet music. Customers receive a coupon for each dollar spent on recorded music or sheet music. Customers may exchange $200$ coupons and $$30$ for an MP$3$ player. Kingbird pays $$43$ for each player and estimates that $40\%$ of the coupons given to customers will be redeemed.

Kingbird's total sales for $2025$ were $$7,608,000$;$$6,248,000$ from musical instruments and sound reproduction equipment and $$1,360,000$ from recorded music and sheet music. Replacement parts and labor for warranty work totaled $$94,500$ during $2025($ $$40,500$ of the work is related to pre$-2025$ sales$).$ A total of $6,440$ players used in the premium program were purchased during the year and there were $1,164,000$ coupons redeemed in $2025.$

The balances in the accounts related to warranties and premiums on January $1,2025,$ were as shown below.

$\backslash$table$[[$Premium Inventory,$$36,340$