"Which of the following statements regarding capital budgeting is(are) correct? I. Capital budgeting is the process of planning expenditures on assets with cash flows that are expected to extend beyond one year. II. Capital budgeting decisions are long-term decisions that often involve large expenditures III. When making capital budgeting decisions, managers do not need to consider if the project will add value to the firm."

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?