Question

Cherokee Inc. is a merchandiser that provided the following information: Amount 12,000 $ 17 $ 1 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 $ 22,000 $ 13,000 $ 9,000 $ 25,000 $ 86,000 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

Answer 1

Req 1	Cherokee Inc.
	Traditional Income Statement
	Sales Revenue		204,000
	Cost of Goods sold		70,000
	Gross Margin		134,000
	Selling and administrative expense:
	Selling Expense	34,000
	Administrative Expenses	37,000	71,000
	Net Profit		63,000
	Note 1: No. of Units
	Total SALES	204,000
	Divided by Selling price	17
	No. of Units	12,000
	Note 2: Cost of Goods Sold
	Beginning Inventory	9,000
	Add: Purchases	86,000
	Less: Eniding Inventory	(25,000)
	Cost of Goods sold	70,000
Req 2	Cherokee Inc.
	Contribution format Income Statement
	Sales Revenue		204,000
	Variable Expenses
	Cost of Goods sold	70,000
	Selling Expense	12,000
	Administrative Expenses	24,000	106,000
	Contribution margin		98,000
	Fixed Expense:
	Selling Expense	22,000
	Administrative Expenses	13,000	35,000
	Net Profit		63,000