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Exercise 1-6 Traditional and Contribution Format Income Statements [LO1-6]
Cherokee Inc. is a merchandiser that provided the following information:
| | Amount |
| Number of units sold | | 11,000 |
| Selling price per unit | $ | 16 |
| Variable selling expense per unit | $ | 2 |
| Variable administrative expense per unit | $ | 2 |
| Total fixed selling expense | $ | 19,000 |
| Total fixed administrative expense | $ | 15,000 |
| Beginning merchandise inventory | $ | 12,000 |
| Ending merchandise inventory | $ | 24,000 |
| Merchandise purchases | $ | 88,000 |
| |
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.
Prepare a traditional income statement.
| |
| | | Cherokee, Inc. | | Traditional Income Statement | | Sales | | $176,000 | | Cost of goods sold | | (76,000) | | Gross margin | | 100,000 | | Selling and administrative expenses: | | | | Administrative expenses | | | | Selling expenses | | | | | | | | | | 0 | | Net operating income | | | Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a contribution format income statement. | | | | | Cherokee, Inc. | | Contribution Format Income Statement | | | | | | Variable expenses: | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | Fixed expenses: | | | | | | | | | | | | | | | | | | 0 | | | | | | |
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