[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: Account Titles Cash Inventory Common Stock Retained Earnings Beginning Balances $6,080 3,060 7,450 1,690 The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,220. 2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $260 cash. 3. Returned $460 of damaged merchandise. 4. Agreed to keep other damaged merchandise for which the company received a $285 allowance. 5. Sold merchandise that cost $2,590 for $4,860 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to $105 cash. 7. Paid $2,880 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 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 Operating expenses Terry Stmt CF Terry Inc Stmte Terry Stmt CF Prepare a statement of cash flows. (Cash outflows 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