Abstract: A method of preparing a carton with a prefolded interior paper lining includes feeding carton blanks having a surface, the surface having leading and trailing edges and right and left side edges, feeding a paper web, folding the paper web to have a base portion having an edge and at least a first flap joining the base portion at a first crease, cutting a section off the paper web, and inserting the paper section with the carton blank surface, such that the edge and crease of the base portion of the paper are spaced a predetermined distance inward from each respective carton blank side edge.