I have figured out the top portion and it shows that i have it correct. BUT I CAN'T FIGURE OUT THE ERRORS IN THE INCONME STATEMENT AND STATEMENT OF CASHFLOWS.

Exercise 3-7 Effect of purchase returns and allowances and freight costs on the financial statements: Perpetual system LO 3-2 The following information applies to the questions displayed below] The beginning account balances for Austin's Auto Shop as of January 1, 2014, follows: Account Titles Cash Inventory Common stock Retained earnings Beginning Balances $11,000 8,000 12,500 6,500 The following events affected the company during the 2014 accounting period 1. Purchased merchandise on account that cost $11,000 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $770 cash. 3. Returned $1,320 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received an $660 allowance. 5. Sold merchandise that cost $7,410 for $12,820 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $510 cash. 7. Paid $8,000 on the merchandise purchased in Event 1