apter 2 HOn ents: 201870-Second Summer 2018- value 14.32 points Cherokee Inc. is

Question

apter 2 HOn ents: 201870-Second Summer 2018- value 14.32 points Cherokee Inc. is a merchandiser that provided the following information 10,000 16 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 $ 20,000 $13,000 $11,000 $ 26,000 $ 86,000 Required: 1. Prepare a traditional income statement CHEROKEE, INC Traditional Income Statement $160,000 Selling and administrative expenses: 0 2. Prepare a contribution format income statement CHEROKEE, INC Contribution Format Income Sta

Explanation / Answer

1) CHEROKEE, INC.

Traditional Income Statement (Amounts in $)

2)   CHEROKEE, INC.

Contribution Format Income Statement (Amounts in $)

Sales (10,000 units*$16) 160,000 Less: Cost of goods sold (Beg Inventory+Purchases-End Inventory) (11,000+86,000-26,000) (71,000) Gross Profit 89,000 Selling and Administrative expenses: Variable selling expenses (10,000 units*$1 per unit) 10,000 Variable administrative expenses (10,000 units*$2 per unit) 20,000 Total fixed selling expense 20,000 Total fixes administrative expense 13,000 (63,000) Net Income 26,000

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