The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: Account Titles Cash Inventory Common Stock Retained Earnings Beginning Balances $ 6,100 3,160 7,400 1,860 The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,190. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $210 cash. 3. Returned $470 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received a $240 allowance. 5. Sold merchandise that cost $2,550 for $4,940.cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $110 cash. 7. Paid $2,860 on the merchandise purchased in Event 1. Income Statement Statement of Cash Flows Prepare an income statement. TERRY'S AUTO SHOP Income Statement For the Year Ended December 31, Year 2 Sales revenue Cost of goods sold Gross margin Operating expenses Net income- 69 $ 0 0 Income Statement Statement of Cash Flows Prepare a statement of cash flows. Note: 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: Cash inflow from customers Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities: Net change in cash Plus: Beginning cash balance Ending cash balance 69 $ 69 $ 0 0 0