Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate com ! Required information [The following information applies to the questions displayed below.) The trial balance for Terry's Auto Shop as of January 1, Year 2, follows: Account Title Debit Credit Canh $14,550 Inventory 3,060 Common Stock $ 7,360 Retained Earnings 10,250 Total $17.610 $17.610 The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,150. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $250 sh. 3. Returned $400 of damaged merchandise for credit on account 4. Agreed to keep other damaged merchandise for which the company received an $295 allowance. 5. Sold merchandise that cost $2,730 for $14,000 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $105 7. Paid $2,830 on the merchandise purchased in Event 1. 8. Paid $8,530 cash for operating expenses. cash c. Prepare a multistep income statement, balance sheet, and statement of cash flows, (Assume that closing entries have been made) Answer is not complete. Check my work mode: This shows what is correct or incorrect for the c. Prepare a multistep income statement, balance sheet, and statement of cash flows. (Assume that closing entries have been made.) Answer is not complete. 14 Complete this question by entering your answers in the tabs below. Income Statement Balance Sheet Statement of Cash Flows Prepare an income statement TERRY'S AUTO SHOP Income Statement For the Year Ended December 31, Year 2 Not sales $ 14,000 14.000 03 Operating expenses 8.530 5.470 Balance Sheet > d. Why does a difference exists between net income and net cash flow from operating activities Multiple Choice D O The diarence between net income and not cash flow from operating the eats because operating expenses are not required be to accounted for when determining net income The difference between net income and not confow from operating activities exists because the shop in not selling all the wentory that it purchased during the period. The difference between net income and net cash flow from operating activities exists because of maintaining the inventory records using the perpetual inventory system