Exercise 3-16A (Algo) Effect of sales returns and allowances and freight costs on the financial statements: Perpetual system LO 3-2, 3-3, 3-4, 3-6, 3-7 Powell Company began the Year 3 accounting period with $35,000 cash, $73,000 inventory, $54,000 common stock, and $54,00 retained earnings. During Year 3 , Poweil experienced the following events: 1. Sold merchandise costing $46,500 for $98,000 on-account to Prentise Furniture Store. 2. Delivered the goods to Prentise under terms FOB destination. Freight costs were $900 cash. 3. Recelved returned goods from Prentise. The goods cost Powell $4,500 and were sold to Prentise for $6,400. 4. Granted Prentise a \$2,500 allowance for damaged goods that Prentise agreed to keep. 5. Collected partial payment of $78,000 cash from accounts recelvable. 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? Complete this question by entering your answers in the tabs below. Prepare a statement of cash flows for Powell Company. (Cash outflows should be indicated with a minus sign.) Complete this question by entering your answers in the tabs below. Prepare a statement of cash flows for Powell Company. (Cash outflows should be indicated with a minus sign.)