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

		Amount
Number of units sold		20,000
Selling price per unit	$	30
Variable selling expense per unit	$	4
Variable administrative expense per unit	$	2
Total fixed selling expense	$	40,000
Total fixed administrative expense	$	30,000
Beginning merchandise inventory	$	24,000
Ending merchandise inventory	$	44,000
Merchandise purchases	$	180,000

Required:

1. Prepare a traditional income statement.

2. Prepare a contribution format income statement.

Prepare a traditional income statement. Cherokee, Inc. Traditional Income Statement Sales $ 600,000 160,000 440,000 Cost of goods sold Gross margin Selling and administrative expenses: Administrative expenses Selling expenses $ 70,000 120,000 190,000 Net operating income Prepare a contribution format income statement. Cherokee, Inc. Contribution Format Income Statement $ 600,000 Sales Variable expenses: Cost of goods sold 160,000 Selling expenses Administrative expenses 160,000 Contribution margin Fixed expenses: Selling expenses Administrative expenses