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Powell Company began the Year 3 accounting period with $49,000 cash, $95,000 inventory, $69,000 common stock, and $75,000 retained earnings, During Year 3 , Powell experienced the following events: 1. Sold merchandise costing $62,500 for $108,500 on account to Prentise Furniture Store. 2. Delivered the goods to Prentise under terms FOB destination. Freight costs were $800 cash. 3. Received returned goods from Prentise. The goods cost Powell $4,900 and were sold to Prentise for $7,600. 4. Granted Prentise a $3,900 allowance for damaged goods that Prentise agreed to keep. 5. Collected partial payment of $89,500 cash from accounts receivable. Required: a. Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). b. Prepare an income statement, a balance sheet, and a statement of cash flows. c. Why would Prentise agree to keep the damaged goods? Use a horizontal financial statements model to show how'each event affects the balance sheet, income statement, and statement of cash events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Prepare an income statement for Powell Company. Prepare a balance sheet for Powell Comnanv. Prepare a statement of cash flows for Powell Company. Note: Cash outflows should be indicated with a minus sign

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