Problem 5-3B Journal entries for merchandising activities-perpetual LO3 Amuse Me Co. buys and sells new and used equipment for amusement parks, carnivals, parks, and zoos. Pre- pare general journal entries to record the following perpetual system merchandising transactions of Amuse Me Co. Use a separate account for each receivable and payable; for example, record the purchase on July 3 in Accounts Payable-CMP Corp. 383 CHAPTER 5 Accounting for Merchandising Activities July 3 4 7 10 11 12 14 Purchased bumper cars from CMP Corp. for $32,000 under credit terms of 1/10, n/30, FOB destination. At CMP's request, paid $1,500 for freight charges on the July 3 purchase, reducing the amount owed to CMP. Sold cotton candy machines to West Coast Zoo for $21,000 under credit terms of 2/10,n/60, FOB destination. The merchandise had cost $17.500. Purchased snow cone machines from Cimarron Corporation for $29,300 under credit terms of 1/10, n/45, FOB shipping point Paid $1,200 shipping charges related to the July 7 sale to West Coast Zoo. West Coast Zoo returned merchandise from the July 7 sale that had cost $2,500 and been sold for $3,500. The merchandise was restored to inventory. After negotiations with Cimarron Corporation concerning problems with the merchandise purchased on July 10, received a credit memo from Cimarron granting a price reduction of $4,100. Received balance due from West Coast Zoo for the July 7 sale. Sold for cash a piece of vacant land for its original cost of $62,000. Purchased a used van for the business, $28,000; paid cash of $10,000 and borrowed the balance from the bank. Paid the amount due Cimarron Corporation for the July 10 purchase. Sold a climbing wall to Canadian National Exhibition for $18,000 under credit terms of 1/10,n/30. FOB shipping point. The merchandise had cost $13,100. Canadian National Exhibition requested a price reduction on the July 21 sale because the merchandise did not meet specifications. Sent Canadian National Exhibition a credit memo for $3,000 to resolve the issue. Received Canadian National Exhibition's payment of the amount due from the July 21 purchase. Paid CMP Corp. the amount due from the July 3 purchase. 17 18 19 20 21 24 31 31 Analysis Component: Regarding the July 24 transaction, what alternative is there to granting a credit memo? Be sure to identify and explain an advantage and disadvantage of the alternative