To stimulate the sales of its Alladin breakfast cereal, Culver Company places $1$ coupon in each box. $5$ coupons are redeemable for a

premium consisting of a children's hand puppet. In $2026,$ the company purchases $51,700$ puppets at $$1\mathrm{.}60$ each and

sells $475,000$ boxes of Alladin at $$3\mathrm{.}85$ 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 $2026,107,500$ 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 O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.

List all debit entries before credit entries.$)$

Account Titles and Explanation

Credit

Premium Inventory

$($To record purchase of puppets$)$

$($To record the sales$)$

Premium Inventory

$($To record redemption of coupons$)$

$($To record a liability for premiums$)$