Problem 5-4 [LO 5-5, LO 5-6] Beach Cities Rentals rents almost anything. They rent tools, equipment, trucks for everything from home remodeling projects to major construction projects. They also rent office equipment, such as desks, file cabinets, chairs, tables, and office dcor items. Finally, they rent furniture for short term home staging or long-term use. They have become well known in the area for having what their customers want. Construction companies, contractors, real estate agents, office managers, and individual homeowners and renters all rely on Beach Cities to have what they need in stock. The following case describes Beach Cities' processes for renting its inventory to customers: Rental inventory and inventory categories Beach Cities categorizes its inventory by the type of inventory. Each inventory item is identified internally by the inventory number (retail inventory #) and categories are tracked by inventory category number (inventory category #). The inventory category # serves as Beach Cities catalog number for its catalog and website. For example, Beach Cities catalog could list executive desk chairs (category number 420), but internally it tracks each individual desk chair in inventory. Contracts Because Beach Cities is so popular with a variety of organizations, such as construction companies, major contractors. real estate agents, office managers, and others in the area, it regularly negotiates contracts for equipment rental. The contracts give customers special considerations, such as delivery of equipment to the customer's location, waiver of the requirement for advance deposit, and priority reservations Contracts can specify that the customer will pay a premium over the regular rental prices to receive special services or they can specify whether the customer will receive volume. discounts over the regular rental prices. Contracts don't apply to specific inventory items or categories of inventory items. Instead, they obligate the customer to a minimum dollar commitment for rentals over the period of the contract as well as the percentage premium or discount on the standard rental costs. Some customers negotiate multiple contracts depending on their needs, but each contract is established separately.