Required information Exercise 4-12A (Algo) Effect of purchase returns and allowances and freight costs on the journal, ledger, and financial statements: Perpetual system LO 4-2, 4-4, 4-6 [The following information applies to the questions displayed below.] The trial balance for Terry's Auto Shop as of January 1, Year 2, follows: Account Titles Cash Inventory Common Stock Retained Earnings Total Debit $14,820 3,060 Credit $7,380 10,500 $17,880 $ 17,880 The following events affected the company during the Year 2 accounting period 1. Purchased merchandise on account that cost $4,150. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $280 cash. 3. Returned $470 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received an $205 allowance. 5. Sold merchandise that cost $2,590 for $13,600 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $150 cash. 7. Paid $2.910 on the merchandise purchased in Event 1. 8. Paid $8,640 cash for operating expenses