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

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

	Amount
Number of units sold		11,000
Selling price per unit	$	16
Variable selling expense per unit	$	2
Variable administrative expense per unit	$	2
Total fixed selling expense	$	19,000
Total fixed administrative expense	$	15,000
Beginning merchandise inventory	$	12,000
Ending merchandise inventory	$	24,000
Merchandise purchases	$	88,000

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.

Prepare a traditional income statement.

Cherokee, Inc.
Traditional Income Statement
Sales		$176,000
Cost of goods sold		(76,000)
Gross margin		100,000
Selling and administrative expenses:
Administrative expenses
Selling expenses
		0
Net operating income

Complete this question by entering your answers in the tabs below.

Required 1

Required 2

Prepare a contribution format income statement.

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