You have recently been hired as controller of Benjamin Enterprises, a manufacturing company. In addition to its manufacturing facility, the company operates an exploration site where it has been successful in discovering oil that is used in its manufacturing division. The company also has a chain of stores that sell the manufacturing products. The previous controller left suddenly due to illness. Your first task is to prepare the liability section of the financial statements for the year ended December 31, 2022. Below are selected issues that you are working to resolve. Benjamin Enterprises reports under international financial reporting standards (IFRS).

Required:

Please show all calculations.

The stores offer a promotion to its customers. Customers receive a coupon with each purchase of the companys plastic products. A free Travel Mug is awarded to the customer when the customer presents 10 coupons. The travel mug cost the company $1.50 each. At the start of the year the company had purchased 1,600 of the mugs. The company issued 5,000 coupons throughout the year. The company expects that 70% of the coupons will be redeemed. During the year 1500 coupons were redeemed.

a) Record all journal entries related to coupons. Assume the expense approach is used.

b) Prepare the journal entries for December 31, 2022.