bok nt int ences Powell Company began the Year 3 accounting period with $46,000 cash, $92,000 inventory, $66,000 common stock, and $72,000 retained earnings. During Year 3, Powell experienced the following events 1. Sold merchandise costing $61,000 for $105,500 on account to Prentise Furniture Store 2. Delivered the goods to Prentise under terms FOB destination. Freight costs were $800 cash. 3. Received returned goods from Prentise. The goods cost Powell $4,600 and were sold to Prentise for $7,000. 4. Granted Prentise a $3,600 allowance for damaged goods that Prentise agreed to keep. 5. Collected partial payment of $86,500 cash from accounts receivable Required a. Record the events in a statements model shown below. b. Prepare an income statement, a balance sheet, and a statement of cash flows. c. Why would Prentise agree to keep the damaged goods?