Powell Company began the 2018 accounting period with $33,000 cash, $71,000 inventory, $52,000 common stock, and $52,000 retained earnings. During 2018, Powell experienced the following events:

Sold merchandise costing $45,500 for $96,000 on account to Prentise Furniture Store.

Delivered the goods to Prentise under terms FOB destination. Freight costs were $1,200 cash.

Received returned goods from Prentise. The goods cost Powell $5,300 and were sold to Prentise for $4,700.

Granted Prentise a $2,300 allowance for damaged goods that Prentise agreed to keep.

Collected partial payment of $76,000 cash from accounts receivable.

Required

A. Record the events in a statements model shown below.

B. Prepare an income statement,

C. a balance sheet

D. a statement of cash flows.

E. Why would Prentise agree to keep the damaged goods?

A.

B.

C.

D.

E.

POWELL COMPANY Financial statements Model for 2018 Event No. can Retained Assets = Stockholders' Equity Income Statement Statement of Cash Accounts Common Flows + Inventory = Revenue - Expenses = Receivable Stock Earnings Income 33,000+ + 71,000 = 52,000 + 52,000 - O + + = + -N -N O Bal 1a. Total