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When Santa returns home, he learns about the tragedy in the workshop. His helpers, Kent and Judy tell him about a practical joke gone wrong. Is this the worst setback Santa has ever faced? Is there hope to recover from the loss of millions of toys?
The elves get busy gathering materials and paints for more toys, and beavers lend their skill to rebuild the shop. Santa encourages his helpers by getting their mines off the destruction of the bad little elves. He assures them there are even more good boys and girls out there than ever before.