Barlow company manufactures three products: a, b, and
c. the selling price, variable costs, and contribution margin for one unit of each product follow: product a b c selling price $ 240 $ 320 $ 300 variable expenses: direct materials 18 72 27 other variable expenses 174 152 228 total variable expenses 192 224 255 contribution margin $ 48 $ 96 $ 45 contribution margin ratio 20 % 30 % 15 % the same raw material is used in all three products. barlow company has only 4,900 pounds of raw material on hand and will not be able to obtain any more of it for several weeks due to a strike in its supplier's plant. management is trying to decide which product(s) to concentrate on next week in filling its backlog of orders. the material costs $9 per pound.

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?