Question

Cherokee Inc. is a merchandiser that provided the following information: Amount 13,000 16 2 Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases $ $ 18,000 $ 16,000 $ 9,000 $ 25,000 $ 89,000 Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a traditional income statement. Cherokee, Inc. Traditional Income Statement Prev 2 search

Answer 1

cherokee Inc Traditional Income statement sales $2087000 en cost of goods sold 73,000 Gross propit . 135,000 ess: selling & administrative expenses selling expenses - $44,000 Administrative expenses - 55,000 99,000 $36,000 Net Operating income Explanation sales & Nou of units fold & price per canit -) 13,000 x $16 ) $208,000 cost of goods - Opening Ending & Purchases - sold Inventory Inventory -) $9,000 + 89,000 - 25,000 - $73,000 Selling expenses >> 013000* $ 2) + 18,000 - $44,000 Administrative expenses = (13,000 x 3) + 16,000 = $ 55,000

2) Om Cherokee anc contribution Income statement 26,000 sales 0 208 $206,000 variable expenses $73,000 cost of goods sold selling expenses vesttatte experises? I - 39,000 138,000 administrative contribution margin 70,000 fixed expenses selling expenses - 18,000 administratie expenses - 16,000 - 34,000 bodA Het operating income boucles $36,000 explanation 27 variable Selling expenses = 13000x $2 = $26,000 Administrative expenses = 13,000× $3 - 39,000

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