Question

Cherokee Inc. is a merchandiser that provided the following information: 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 Amount 13,000 $ 17 $ 2 $ $18,000 $15,000 $11,000 $22,000 $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 Selling and administrative expenses:

Answer 1

221000 78000 Cherokee Inc Traditional Income statement Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses 143000 44000 28000 72000 Total selling and administrative expenses Net operating income 71000

221000 78000 26000 13000 Cherokee Inc Contribution format Income statement Sales Variable Expenses: Cost of goods sold Selling expenses (units sold * Selling price per unit) administrative expenses Total variable expenses Contribution margin Fixed Expenses: Selling expenses Administrative expenses Total Fixed expenses Net Operating Income 117000 104000 18000 15000 33000 71000