Question

Required information 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 Beginning Balances $6,110 Account Titles Cash Inventory Common Stock Hetained Earnings The following events affected the company during the Year 2 accounting period 1. Purchased merchandise on account that cost $1.200 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $245 cash. 3. Retumed $455 of damaged merchandise for credit on account 4. Agreed to keep other damaged merchandise for which the company received a $270 allowance 5. Sold merchandise that cost $2 660 for $4 810 cash 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $150 cash 7. Pald $2.820 on the merchandise purchased in Event 1

Answer 1

TERRY'S AUTO SHOP

Income Statement

For the year ended December31, Year2

PARTICULARS	AMOUNT (in $)
Net Sales	4,810
Cost of Goods Sold	2,660
Gross Profit	2,150
Operating Expenses
Trasnportation out	(150)
Net Income	2,000

TERRY'S AUTO SHOP

Statement of Cash Flows

For the year ended December31, Year2

Particulars	Detail (in$)	Amount (in $)
CASH FLOW FROM OPERATING ACTIVITIES
Cash Received from Customers	4,810
Cash Paid for Inventory Purchase ($2,820+$245)	(3,065)
Cash Paid for Operating Activities	(150)
Net Cash Flow from Operating Activities		1,595
CASH FLOW FROM INVESTING ACTIVITIES		0
CASH FLOW FROM FINANCING ACTIVITIES		0
Net Increase in Cash		1,595
ADD: Beginning Cash Balance		6,110
Ending Cash Balance		7,705

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