The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: Beginning Balances $ 6,120 3,100 7,450 1,770 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 $4,270. 2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $230 cash. 3. Returned $410 of damaged merchandise. 4. Agreed to keep other damaged merchandise for which the company received a $285 allowance. 5. Sold merchandise that cost $2,580 for $4,790 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to $165 cash. 7. Paid $2,960 on the merchandise purchased in Event 1. 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 Incorporated Statement Terry Statement Cash Flow Prepare an income statement. TERRY'S AUTO SHOP Income Statement For the Year Ended December 31, Year 2 Operating expenses $ 0 0
The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: Beginning Balances $ 6,120 3,100 7,450 1,770 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 $4,270. 2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $230 cash. 3. Returned $410 of damaged merchandise. 4. Agreed to keep other damaged merchandise for which the company received a $285 allowance. 5. Sold merchandise that cost $2,580 for $4,790 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to $165 cash. 7. Paid $2,960 on the merchandise purchased in Event 1. 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 Incorporated Statement Terry Statement Cash Flow Prepare an income statement. TERRY'S AUTO SHOP Income Statement For the Year Ended December 31, Year 2 Operating expenses $ 0 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow:
Beginning
Balances
$ 6,120
3,100
7,450
1,770
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 $4,270.
2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $230 cash.
3. Returned $410 of damaged merchandise.
4. Agreed to keep other damaged merchandise for which the company received a $285 allowance.
5. Sold merchandise that cost $2,580 for $4,790 cash.
6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to
$165 cash.
7. Paid $2,960 on the merchandise purchased in Event 1.
. 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
Incorporated
Statement
Terry
Statement
Cash Flow
Prepare an income statement.
TERRY'S AUTO SHOP
Income Statement
For the Year Ended December 31, Year 2
Operating expenses
$
0
0
Expert Solution
Step 1: Introduction
An income statement summarises a company's sales, costs, and expenses for a certain time period, resulting in the calculation of net income or net loss and providing insights into its profitability. A cash flow statement summarises a company's cash inflows and outflows during a given period, categorizing them as operating, investing, and financing operations, and aids in understanding its cash sources and uses, as well as its ability to create future cash flows..
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