Exercise 4-16A Effect of sales returns and allowances and freight costs on the journal, ledger, and financial statements: Perpetual system 2 Powell Company began the 2016 accounting period with $40,000 cash, $86,000 inventory S60,000 common stock, and S66,000 retained earnings. During 2016, Powell experienced the fol- lowing events: Sold merchandise costing $58,000 for $99,500 on account to Prentise Furniture Store Delivered the goods to Prentise under terms FOB destination. Freight costs were $900 cash. 3. Received returned goods from Prentise. The goods cost Powell $4,000 and were sold to Prentise for $5,900. 4. Granted Prentise a $3,000 allowance for damaged goods that Prentise agreed to keep. 5. Collected partial payment of $81,000 cash from accounts receivable