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Cherokee Inc

Accounting

Cherokee Inc. is a merchandiser that provided the following information:

    Amount
Number of units sold   13,000
Selling price per unit $ 16
Variable selling expense per unit $ 2
Variable administrative expense per unit $ 3
Total fixed selling expense $ 21,000
Total fixed administrative expense $ 14,000
Beginning merchandise inventory $ 9,000
Ending merchandise inventory $ 23,000
Merchandise purchases $ 86,000
 

Required:

1. Prepare a traditional income statement.

2. Prepare a contribution format income statement.

6 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 13,000 15 2 3 $ 19,000 $ 16,000 $ 12,000 $ 25,000 $ 86,000 Required: 1. Prepare a traditional income statement. Cherokee, Inc. Traditional Income Statement Selling and administrative expenses

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1.

Cherokee, Inc.
Traditional format Income Statement
Sales (13000*$16)   $2,08,000
Less: Cost Of Goods sold (9000+86000-23000)   $72,000
Gross Profit   $1,36,000
Selling and Administrative Expenses:    
Variable Selling Expenses $26,000  
Variable Administrative Expenses $39,000  
Fixed Selling Expenses $21,000  
Fixed Administrative Expenses $14,000  
Total expenses   $1,00,000
Net Operating Income   $36,000

2.

Cherokee, Inc.
Contribution format Income Statement
Sales (13000*$16)   $2,08,000
Variable Expenses:    
Coat of goods sold (9000+86000-23000) $72,000  
Variable Selling Expenses $26,000  
Variable Administrative Expenses $39,000  
Total Variable Expenses   $1,37,000
Contribution Margin   $71,000
Fixed Expenses:    
Fixed Selling Expenses $21,000  
Fixed Administrative Expenses $14,000  
Total Fixed Expenses   $35,000
Net Operating Income   $36,000

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