At May 31, 2020, the accounts of Sheridan Company show the following.
1. May 1 inventories—finished goods $15,400, work in process $16,000, and raw materials $9,100.
2. May 31 inventories—finished goods $9,800, work in process $16,200, and raw materials $7,400.
3. Debit postings to work in process were direct materials $64,800, direct labor $51,300, and manufacturing overhead applied $40,600. (Assume that overhead applied was equal to overhead incurred.)
4. Sales revenue totaled $216,600.

Powell company began the 2018 accounting period with $40,000 cash, $86,000 inventory, $60,000 common stock, and $66,000 retained earnings. during 2018, powell experienced the following events: sold merchandise costing $58,000 for $99,500 on account to prentise furniture store. delivered the goods to prentise under terms fob destination. freight costs were $900 cash. received returned goods from prentise. the goods cost powell $4,000 and were sold to prentise for $5,900. granted prentise a $3,000 allowance for damaged goods that prentise agreed to keep. collected partial payment of $81,000 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?