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 freight cost of $275 cash. 3. Returned $450 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received a $220 allowance. 5. Sold merchandise that cost $2,690 for $4,800 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $110 cash. 7. Paid $2,800 on the merchandise purchased in Event 1. Complete this question by entering your answers in the tabs below. Prepare an income statement. Prepare a statement of cash flows. (Amounts to be deducted should be indicated with a minus sign.)