LO 4-2, 4-3 Exercise 4-7B Effect of purchase returns and allowances and freight costs on the journal, ledger, and financial statements: Perpetual system The trial balance for The Bolt Co as of January 1, 2016, was as follows: Account Titles Debit Credit Cash Inventory 6,000 Common Stock $15.000 Retained Earnings 3.000 Total $18,000 $18,000 $12,000 SER 258 Chapter 4 The following events affected the company during the 2016 accounting period: 1. Purchased merchandise on account that cost $8,200. 2. The goods in Event I were purchased FOB shipping point with freight cost of $600 cash. 3. Returned $800 of damaged merchandise for credit on account 4. Agreed to keep other damaged merchandise for which the company received a $400 allowance 5. Sold merchandise that cost $5,500 for $9,500 cash. 6. Delivered merchandise to customers under terms FOB destination with freight costs amount ing to $300 cash. 7. Paid $5,000 on the merchandise purchased in Event I. Required 1. Record the transactions in general journal format. b. Open general ledger T-accounts with the appropriate beginning balances, and post the jour- nal entries to the T-accounts. c. Prepare an income statement and statement of cash flows for 2016, d. Explain why a difference does or does not exist between niet income and net cash flow from operating activities