The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: Beginning Balances $ 6,010 3,000 7,330 1,680 Account Titles Cash Inventory Common Stock Retained Earnings The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,300. 2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $230 cash. 3. Returned $445 of damaged merchandise. 4. Agreed to keep other damaged merchandise for which the company received a $225 allowance. 5. Sold merchandise that cost $2,570 for $4,830 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to $185 cash. 7. Paid $2,850 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.)

The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: Beginning Balances $ 6,010 3,000 7,330 1,680 Account Titles Cash Inventory Common Stock Retained Earnings The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,300. 2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $230 cash. 3. Returned $445 of damaged merchandise. 4. Agreed to keep other damaged merchandise for which the company received a $225 allowance. 5. Sold merchandise that cost $2,570 for $4,830 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to $185 cash. 7. Paid $2,850 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.)

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 37E: Analyzing the Accounts Casey Company uses a perpetual inventory system and engaged in the following...

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