To increase the sales of its Sugar Kids breakfast cereal, Pina Colada Foods Limited places one coupon in each cereal box. Five coupons are redeemable for a premium consisting of a childs hand puppet. In 2020, Pina Colada purchases 40,200 puppets at $1.35 each and sells 483,000 boxes of Sugar Kids at $3.20 a box. Ignore any cost of goods sold. Pina Colada estimates that $0.20 of the sale price relates to the hand puppet to be awarded. From its experience with other similar premium offers, Pina Colada estimates that 40% of the coupons issued will be mailed back for redemption. During 2020, 118,500 coupons are presented for redemption. Pina Colada is a private company following ASPE.

Prepare the journal entries that should be recorded in 2020 relative to the premium plan, assuming that Pina Colada follows a policy of charging the cost of coupons to expense as they are redeemed and adjusting the liability account at year end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
Accounts Receivable Accounts Payable Sales Revenue Inventory of Premiums Unearned Revenue Cash Premium Expense Estimated Liability for Premiums Retained Earnings No Entry
Estimated Liability for Premiums Retained Earnings No Entry Sales Revenue Accounts Payable Inventory of Premiums Cash Premium Expense Unearned Revenue Accounts Receivable
(To record purchase of puppets)
No Entry Sales Revenue Estimated Liability for Premiums Inventory of Premiums Accounts Payable Retained Earnings Unearned Revenue Accounts Receivable Cash Premium Expense
Inventory of Premiums Premium Expense Estimated Liability for Premiums Cash Retained Earnings Sales Revenue Unearned Revenue No Entry Accounts Payable Accounts Receivable
(To record sales of boxes)
Premium Expense Unearned Revenue Inventory of Premiums Retained Earnings Sales Revenue No Entry Accounts Receivable Accounts Payable Cash Estimated Liability for Premiums
Accounts Receivable Estimated Liability for Premiums Unearned Revenue Cash Accounts Payable Premium Expense Retained Earnings Inventory of Premiums Sales Revenue No Entry
(To record redemption)
Retained Earnings Inventory of Premiums Cash Unearned Revenue Sales Revenue Accounts Receivable Estimated Liability for Premiums No Entry Premium Expense Accounts Payable
Accounts Payable Unearned Revenue Estimated Liability for Premiums Accounts Receivable No Entry Premium Expense Cash Sales Revenue Inventory of Premiums Retained Earnings
(To accrue premium expense)

Prepare the journal entries that should be recorded in 2020 relative to the premium plan, assuming that Pina Colada follows a policy of charging the full estimated cost of the premium plan to expense when the sales are recognized. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
Inventory of Premiums Accounts Payable Premium Expense No Entry Accounts Receivable Estimated Liability for Premiums Cash Retained Earnings Sales Revenue Unearned Revenue
Sales Revenue Inventory of Premiums No Entry Accounts Receivable Cash Unearned Revenue Estimated Liability for Premiums Premium Expense Accounts Payable Retained Earnings
(To record purchase of puppets)
Premium Expense Unearned Revenue Accounts Receivable Retained Earnings Cash Sales Revenue No Entry Estimated Liability for Premiums Accounts Payable Inventory of Premiums
Estimated Liability for Premiums Unearned Revenue No Entry Accounts Payable Cash Accounts Receivable Inventory of Premiums Premium Expense Retained Earnings Sales Revenue
(To record sales of boxes)
Retained Earnings No Entry Unearned Revenue Accounts Payable Estimated Liability for Premiums Cash Inventory of Premiums Premium Expense Accounts Receivable Sales Revenue
Estimated Liability for Premiums Retained Earnings Premium Expense Sales Revenue No Entry Accounts Payable Accounts Receivable Unearned Revenue Inventory of Premiums Cash
(To accrue premium expense)