Exercise $4-12$A $($Algo$)$ Effect of purchase returns and allowances and freight costs on the journal, ledger, and financial statements: Perpetual system LO $4-2,4-4,4-6$

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$[$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 Titles Debit Credit

Cash $ $14,810$

Inventory $3,160$

Common Stock $ $7,450$

Retained Earnings $10,520$

Total $ $17,970$ $ $17,970$

The following events affected the company during the Year $2$ accounting period:

Purchased merchandise on account that cost $$4,240.$

The goods in Event $1$ were purchased FOB shipping point with freight cost of $$240$ cash.

Returned $$460$ of damaged merchandise for credit on account.

Agreed to keep other damaged merchandise for which the company received an $$215$ allowance.

Sold merchandise that cost $$2,640$ for $$13,100$ cash.

Delivered merchandise to customers in Event $5$ under terms FOB destination with freight costs amounting to $$195$ cash.

Paid $$2,940$ on the merchandise purchased in Event $1.$

Paid $$8,760$ cash for operating expenses.