McPherson Company sold goods to a customer at a sales price of $1,000. In addition, an additional $50 for sales tax was collected, for a total amount of cash received from the customer of $1,050.

Due to this transaction, which of the following is true?

Expenses will increase $50
Net income will increase $1,050
Total liabilities will increase $1,050
Total assets will increase $1,050
Revenue will increase $1,050

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?