Extracted text: HOME FURNISHINGS Effect of Events on the Financial Statements Balance Sheet Income Statement Events Assets = Liabilities + Stockholders' Equity Statement of Net Income Revenue Expenses = Cash Flows Common Stock Merchandise Accounts Retained Cash Inventory 32.000 = Payable 32,000 Earnings Purchase inventory 0 + ol- Return inventory 이+ 이- 0 = Record discount Paid accounts payable 이+ 0- 0 = (24,541)+ (24,541) + 이+ 이- 0 = (24,541) OA
Extracted text: Powell Company began the Year 3 accounting period with $45,000 cash, $91,000 inventory, $65,000 common stock, and $71,000 retained earnings. During Year 3, Powell experienced the following events: 1. Sold merchandise costing $60,500 for $104,500 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 $4,500 and were sold to Prentise for $6,800. 4. Granted Prentise a $3,500 allowance for damaged goods that Prentise agreed to keep. 5. Collected partial payment of $85,500 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?