Required information Exercise 3-7A (Static) Effect of purchase returns and allowances and freight costs on the financial statements: Perpetual system LO 3-2, 3-3, 3-4 [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: 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 a $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 . Complete this question by entering your answers in the tabs below. Prepare an income statement. Complete this question by entering your answers in the tabs below. Prepare a statement of cash flows. (Amounts to be deducted should be indicated with a minus sign.) .