Powell Company began the 2018 accounting period with $49,000 cash, $95,000 inventory, $69,000 common stock, and $75,000 retained earnings. During 2018, Powell experienced the following events: Sold merchandise costing $62,500 for $108,500 on account to Prentise Furniture Store. Delivered the goods to Prentise under terms FOB destination. Freight costs were $800 cash. Received returned goods from Prentise. The goods cost Powell $4,900 and were sold to Prentise for $6,600. Granted Prentise a $3,900 allowance for damaged goods that Prentise agreed to keep. Collected partial payment of $89,500 cash from accounts receivable. Required Record the events in a statements model shown below. Prepare an income statement, a balance sheet, and a statement of cash flows. Why would Prentise agree to keep the damaged goods?