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 [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 transportation cost of $265 cash. 3. Returned $425 of damaged merchandise. 4. Agreed to keep other damaged merchandise for which the company recelved a $275 allowance. 5 . Sold merchandise that cost $2,740 for $4,800 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to $180 cash. 7. Paid \$2.890 on the merchandise purchased in Event 1. Prepare a statement of cash flows. Note: Cash outflows should be indicated with a minus sign