Exercise 4-12A (Algo) Effect of purchase returns and allowances and transportation costs on the financial statements: Perpetual system LO 4-2, 4-4, 4-6 [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 $ 6,030 3,040 7,480 1,590 The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4.210. 2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $230 cash. 3. Returned $475 of damaged merchandise. 4. Agreed to keep other damaged merchandise for which the company received a $280 allowance. 5. Sold merchandise that cost $2,740 for $4,830 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to $160 cash. 7. Paid $2.820 on the merchandise purchased in Event 1. Part 2 of 3 12.5 points Complete this question by entering your answers in the tabs below. Terry Incorporated Statement Terry Statement Cash Flow Prepare an income statement. TERRY'S AUTO SHOP Income Statement For the Year Ended December 31, Year 2 Net sales Cost of goods sold Gross margin 4.830 4,210 x 620 Operating expenses Transportation-out 160 Net income 460 Terry Statement Cash Flow > COMUICte uns question uv emerno vuur ausweis muie taus uCIUW. Required information Incorporated Statement Statement Cash Flow 3 Prepare a statement of cash flows. Note: Cash outflows 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 Cash inflow from customers Cash outflow for inventory Cash inflow from expense $ 4,830 ( Net cash flow from operating activities $ 4,830 Cash flows from investing activities Cash flows from financing activities Net change in cash 4,830 Ending cash balance $ 4,830 < Terry Incorporated Statement Terry Statement Cash Flow >