Powell Company began the Year 3 accounting period with $33,000 cash, $71,000 inventory, $52,000 common stock, and $52,000 retained earnings. During Year 3, Powell experienced the following events: 1. Sold merchandise costing $45,500 for $96,000 on account to Prentise Furniture Store. 2. Delivered the goods to Prentise under terms FOB destination. Freight costs were $1,200 cash. 3. Received returned goods from Prentise. The goods cost Powell $5,300 and were sold to Prentise for $6,700. 4. Granted Prentise a $2,300 allowance for damaged goods that Prentise agreed to keep. 5. 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, a balance sheet, and a statement of cash flows. c. Why would Prentise agree to keep the damaged goods? POWELL COMPANY Statement of Cash Flows For the Year Ended December 31, Year 3 Cash flow from operating activities Net cash flow from operating activities Cash flows from investing activities: Cash flows from financing activities: Net change in cash Ending cash balance EA SA $ 0 0 0 Prepare an income statement for Powell Company. POWELL COMPANY Income Statement For the Year Ended December 31, Year 3 Net sales Cost of goods sold Gross margin Operating expenses Transportation-out Net income 40,200 (40,200) 1,200 $ (41,400)