Exercise 4-12A Effect of purchase returns and allowances and freight 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, follows: Account Titles Cash Inventory Common Stock Retained Earnings Beginning Balances $6, 110 3,010 7,360 1,760 The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,100. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $215 cash. 3. Returned $465 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received an $280 allowance. 5. Sold merchandise that cost $2,650 for $4,750 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $110 cash. 7. Paid $2,850 on the merchandise purchased in Event 1. Exercise 4-12A Part b 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. Terry Inc Stmt Terry Stmt CF