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, follows: Account Titles Cash Inventory Common Stock Retained Earnings Beginning Balances $6,160 3. 120 7,420 1.860 The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,240. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $240 cash. 3. Returned $405 of damaged merchandise for credit on account 4. Agreed to keep other damaged merchandise for which the company received an $270 allowance. 5. Sold merchandise that cost $2,630 for $4,910 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $150 cash. 7. Paid $2,930 on the merchandise purchased in Event 1. 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. Terry Inc Stmt Terry Stmt CF Prepare an income statement. TERRY'S AUTO SHOP Income Statement For the Year Ended December 31, Year 2 Net sales Operating expenses 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. Terry Inc Stmt Terry Stmt CF Prepare a statement of cash flows. (Amounts to be deducted should be indicated with a minus sign.) TERRY'S AUTO SHOP Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flow from operating activities Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash Ending cash balance