The beginning account balances for Terrys Auto Shop as of January 1, Year 2, follow:

Account Titles	Beginning Balances
Cash	$	6,170
Inventory		3,200
Common Stock		7,480
Retained Earnings		1,890

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

1. Purchased merchandise on account that cost $4,270.

2. The goods in Event 1 were purchased FOB shipping point with freight cost of $210 cash.

3. Returned $460 of damaged merchandise for credit on account.

4. Agreed to keep other damaged merchandise for which the company received a $280 allowance.

5. Sold merchandise that cost $2,740 for $4,940 cash.

6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $185 cash.

7. Paid $2,860 on the merchandise purchased in Event 1.

TERRY'S AUTO SHOP Income Statement For the Year Ended December 31, Year 2 Sales revenue $ 4,940 4,940 Gross margin Operating expenses Transportation-out Net income 185 $ 4,755 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 4,940 Cash outflow for expenses (185) Cash outflow for inventory $ 4,755 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 4,755 $ 4,755