Exercise 1-6 (Algo) Traditional and Contribution Format Income Statements [LO1-6] 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 Amount 14,000 $ 16 $ 1 $ 2 $ 20,000 $ 15,000 $ 11,000 $ 23,000 $ 86,000 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. Required 1 Required 2 Prepare a traditional income statement. Cherokee, Inc. Traditional Income Statement Sales 224,000 Cost of goods sold 74,000 150,000 Gross margin Selling and administrative expenses: Administrative expenses $ 43,000 Selling expenses 34,000 77,000 Net operating income $ 73,000 Required 1 Required 2 Prepare a contribution format income statement. Cherokee, Inc. Contribution Format Income Statement Sales $ 224,000 Variable expenses: Cost of goods sold $ 74,000 14,000 Selling expenses Administrative expenses 28,000 116,000 Contribution margin 108,000 Fixed expenses: 20,000 Selling expenses Administrative expenses 15,000 35,000 Net operating income Administrative expenses Beginning merchandise inventory Cost of goods sold Direct labor Direct materials Direct materials Ending merchandise inventory Fixed manufacturing overhead Indirect labor Indirect materials Manufacturing overhead Purchases Sales Selling expenses Variable manufacturing overhead