[The following information applies to the questions displayed below.] The trial balance for Terrys Auto Shop as of January 1, Year 2, follows:

Account Titles	Debit			Credit
Cash	$	16,000
Inventory		8,000
Common Stock				$	20,000
Retained Earnings					4,000
Total	$	24,000		$	24,000

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

1. Purchased merchandise on account that cost $15,000.
2. The goods in Event 1 were purchased FOB shipping point with freight cost of $800 cash.
3. Returned $2,600 of damaged merchandise for credit on account.
4. Agreed to keep other damaged merchandise for which the company received an $1,100 allowance.
5. Sold merchandise that cost $15,000 for $31,000 cash.
6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $500 cash.
7. Paid $8,000 on the merchandise purchased in Event 1.
8. Paid $9,000 cash for operating expenses.

a b) c) d)

Required information (The following information applies to the questions displayed below.) The trial balance for Terry's Auto Shop as of January 1, Year 2, follows: Account Titles Cash Inventory Common Stock Retained Earnings Total Debit Credit $16,000 8,000 $20,000 4,000 $24,000 $24,000 The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $15,000. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $800 cash. 3. Returned $2,600 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received an $1,100 allowance. 5. Sold merchandise that cost $15,000 for $31,000 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $500 cash. 7. Paid $8,000 on the merchandise purchased in Event 1. 8. Paid $9,000 cash for operating expenses. Required a. Record the events in general journal format. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Required a. Record the events in general journal format. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record entry for purchase of merchandise on account. Note: Enter debits before credits. Event Credit Debit 15,000 01 General Journal Merchandise inventory Accounts payable 15,000 c. Prepare a multistep income statement, balance sheet, and statement of cash flows. (Assume that closing entries have been made.) Complete this question by entering your answers in the tabs below. Income Statement Balance Sheet Statement of Cash Flows Prepare an income statement. TERRY'S AUTO SHOP Income Statement For the Year Ended December 31, Year 2 Net sales $ 31,000 Cost of goods sold [ 15,000 Gross margin 16,000 Operating expenses 9,000 Transportation-out 500 Net income | $ 6,500 c. Prepare a multistep income statement, balance sheet, and statement of cash flows. (Assume that closing entries have been made.) Complete this question by entering your answers in the tabs below. Income Statement Balance Sheet Statement of Cash Flows Prepare a balance sheet. TERRY'S AUTO SHOP Balance Sheet As of December 31, Year 2 Assets Cash $ Merchandise inventory Accounts receivable Total assets 2,300 5,100 31,000 $ 38,400 Liabilities Accounts payable 3,300 $ 3,300 Total liabilities Stockholders' equity Common stock Retained earnings $ 20,000 10,500 c. Prepare a multistep income statement, balance sheet, and statement of cash flows. (Assume that closing entries have been made.) Complete this question by entering your answers in the tabs below. Income Statement Balance Sheet Statement of Cash Flows Prepare a statement of cash flows. (Assume that closing entries have been made.) (Statement of Cash Flows only, items to be deducted must be indicated with a negative amount.) 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 $ 31,000 Cash inflow from expense Cash inflow from inventory Cash inflow from sale of land Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash $ 31,000 31,000 Ending cash balance $ 31,000 d. Why does a difference exists between net income and net cash flow from operating activities. Multiple Choice O The difference between net income and net cash flow from operating activities exists because operating expenses are not required be to accounted for when determining net income. The difference between net income and net cash flow from operating activities exists because of maintaining the inventory records using the perpetual inventory system. The difference between net income and net cash flow from operating activities exists because the shop is not selling all the inventory that it purchased during the period