3 Required information The following information applies to the questions displayed below.) The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow. Account Titles Cash Inventory Common Stock Retained Earnings Beginning Balances $6, 110 3, 110 7,330 1,890 The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,220. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $215 cash. 3. Returned $405 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received a $275 allowance. 5. Sold merchandise that cost $2,650 for $4,870 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $125 cash. 7. Paid $2,820 on the merchandise purchased in Event 1 b. Prepare an income statement and a statement of cash flows for Year 2. (Assume that closing entries have been made.) Complete this question by entering your answers in the tabs below. Income Statem... Statem... of Cash Prepare an income statement. TERRY'S AUTO SHOP Income Statement For the Year Ended December 31, Year 2 0 Operating expenses $ 0 Income Statement Statement of Cash Flows > Required information The following information applies to the questions displayed below.) The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow Account Titles Beginning Balances Cash $6,110 Inventory 3, 110 Common Stock 7,330 Retained 1,890 Earnings The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,220. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $215 cash. 3. Returned $405 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received a $275 allowance. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting 7. Paid $2,820 on the merchandise purchased in Event 1. b. Prepare an income statement and a statement of cash flows for Year 2. (Assume that closing entries have been made.) Complete this question by entering your answers in the tabs below. Income Statem... Statem... of Cash Prepare a statement of cash flows. (Amounts to be deducted should be indicated with a minus sign.) TERRY'S AUTO SHOP Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flow from operating activities: Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities: Net change in cash 0 0 Ending cash balance $