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? Complete this question by entering your answers in the tabs below. Reg A Req B1 Req B2 Req B3 Reg C Prepare an income statement for Powell Company. POWELL COMPANY Income Statement POWELL COMPANY Income Statement For the Year Ended December 31, Year 3 Net sales $ 87,000 Cost of goods sold Gross margin 87,000 Operating expenses Transportation-out 1,200 Net income $ 85,800 POWELL COMPANY Balance Sheet As of December 31, Year 3 Assets Cash Accounts receivable Merchandise inventory $ 107,800 11,000 30,800 Total assets $ 149,600 Liabilities Stockholders' equity Common stock $ 52,000 97,600 Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 149,600 $ 149,600 POWELL COMPANY Statement of Cash Flows For the Year Ended December 31, Year 3 Cash flow from operating activities Cash outflow for expenses (1,200) Cash inflow from customers 76,000 $ 74,800 0 0 Net cash flow from operating activities Cash flows from investing activities: Cash flows from financing activities: Net change in cash Plus: Beginning cash balance Ending cash balance 74,800 33,000 $ 107,800