Exercise 1-6 Traditional and Contribution Format Income Statements [LO1-6]

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

AmountNumber of units sold13,000Selling price per unit$17Variable selling expense per unit$1Variable administrative expense per unit$1Total fixed selling expense$20,000Total fixed administrative expense$14,000Beginning merchandise inventory$9,000Ending merchandise inventory$23,000Merchandise purchases$88,000

Required:

1. Prepare a traditional income statement.

2. Prepare a contribution format income statement.