Effect of purchase returns and allowances and freight costs on the journal, ledger, and financial statements: Perpetual system The trial balance for Terry's Auto Shop as of January 1, 2016, follows: The following events affected the company during the 2016 accounting period: Purchased merchandise on account that cost $15,000. The goods in Event 1 were purchased FOB shipping point with freight cost of $800 cash. Returned $2, 600 of damaged merchandise for credit on account. Agreed to keep other damaged merchandise for which the company received an $1, 100 allowance. Sold merchandise that cost $15,000 for $31,000 cash. Delivered merchandise to customer in Event 5 under terms FOB destination with freight costs amounting to $500 cash. Paid $8,000 on the merchandise purchased in Event 1. Record the events in general journal format. Open general ledger T-accounts with the appropriate beginning balances, and post the journal entries to the T-accounts. Prepare an income statement, balance sheet, and statement of cash flows. (Assume that closing entries have been made.) Explain why a difference does or does not exist between net income and net cash flow from operating activities