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The trial balance for Terrys Auto Shop as of January 1, Year 2, follows:

Account Titles	Debit	Credit
Cash	$ 14,740
Inventory	3,070
Common Stock		$ 7,330
Retained Earnings		10,480
Total	$ 17,810	$ 17,810

The following events affected the company during the Year 2 accounting period:

Purchased merchandise on account that cost $4,250.

The goods in Event 1 were purchased FOB shipping points with a freight cost of $295 cash.

Returned $445 of damaged merchandise for credit on account.

Agreed to keep other damaged merchandise for which the company received a $230 allowance.

Sold merchandise that cost $2,550 for $13,000 cash.

Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $200 cash.

Paid $2,980 on the merchandise purchased in Event 1.

Paid $8,710 cash for operating expenses

Prepare a multistep income statement, balance sheet, and statement of cash flows. (Assume that closing entries have been made.)