Team Borax is a brand of cleaner manufactured by the US soap firm Dial Corporation. Borax is used as a multipurpose cleaner and bleach and is an all–natural cleaning agent that can be used for the kitchen, laundry and bathroom. It can be combined with warm water to become a powerful cleaning agent. The product is named after the 20-mule teams that were used by William Tell Coleman's company to move borax out of Death Valley, California, to the nearest rail spur between the years 1883 and 1889. “Back in the day” the Borax Corporation produced a weekly television show called “Death Valley Days” - depicting life in the early days of the settling of the Old West. One of the mainstays of the weekly TV series shows a team of 20 mules pulling heavy carts loaded with Borax.

Included with the sale of every box of Borax Detergent is a company offer to receive an exact replica of the 20 Mule Team. In return for 3 box tops plus $2, customers can receive a toy scale model of the 20-mule team replete with wagons and figurines of men who worked with the mule teams.

The company purchases these toys for $5 each. Borax’s experience indicates that 60% of the box tops will be redeemed. During 2019, 200,000 boxes of Borax Detergent were sold at $3.50 per box, 40,000 toys were purchased, and 45,000 box tops were redeemed.

Instructions

Prepare all the journal entries that would be made regarding the following transactions for the 2019 fiscal year:

1. Record the purchase of the 40,000 toys by Borax in 2019.
2. Record the sales of 200,000 boxes of Borax Detergent.
3. Record the redemption of 45,000 box tops plus the receipt of $2 with every 3 box tops, and the delivery of the requisite number of scale model mule teams to customers.
4. Prepare the year end adjusting entry to recognize the remaining expense and estimated liability for outstanding premiums (if any) at the end of the year.
5. What is the total promotional expense for the 2019 fiscal year?