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The beginning account balances for Terrys Auto Shop as of January 1, 2018, follows:
| Account Titles | Beginning Balances |
| Cash | $ | 6,040 | |
| Inventory | | 3,180 | |
| Common Stock | | 7,430 | |
| Retained Earnings | | 1,790 | |
| |
The following events affected the company during the 2018 accounting period:
Purchased merchandise on account that cost $4,260.
The goods in Event 1 were purchased FOB shipping point with freight cost of $285 cash.
Returned $420 of damaged merchandise for credit on account.
Agreed to keep other damaged merchandise for which the company received an $265 allowance.
Sold merchandise that cost $2,600 for $4,840 cash.
Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $115 cash.
Paid $2,990 on the merchandise purchased in Event 1.
Prepare an income statement and a statement of cash flows for 2018. (Assume that closing entries have been made.)
Prepare an income statement.
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| | | TERRY'S AUTO SHOP | | | Income Statement | | | For the Year Ended December 31, 2018 | | | | | | | | | | | | Operating expenses | | | | | | | | Prepare a statement of cash flows. (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, 2018 | | | | 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 | | | | Typewritten answers only, please, no handwritten answers. Thank you. |
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