Organize appropriate ledger accounts under an accounting equation. Record the beginning balances and the transaction data in the accounts. In the last column of the table, provide appropriate account titles for the Retained Earnings amounts. Note: Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank. Not every cell will require entry. Complete this question by entering your answers in the tabs below. Prepare a statement of cash flows. Note: Amounts to be deducted should be indicated with a minus sign. 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. Prepare an income statement. Required information Exercise 3-7A (Algo) Effect of purchase returns and allowances and freight costs on the financial statements: Perpetual system LO 3-2, 3-3, 3-4 [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: The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,230. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $295 cash. 3. Returned $450 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received a $295 allowance. 5. Sold merchandise that cost $2,660 for $4,920 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $160 cash. 7. Paid $2,880 on the merchandise purchased in Event 1