2)

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	$	1
Variable administrative expense per unit	$	1
Total fixed selling expense	$	21,000
Total fixed administrative expense	$	15,000
Beginning merchandise inventory	$	10,000
Ending merchandise inventory	$	26,000
Merchandise purchases	$	89,000

Required:

1. Prepare a traditional income statement.

2. Prepare a contribution format income statement.

Cherokee, Inc.
Traditional Income Statement
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses:
Selling expenses
Administrative expenses
Indirect materials		0
Net operating income

Cherokee, Inc.
Contribution Format Income Statement
Variable expenses:
		0
Fixed expenses:
		0