Cherokee Incorporated is a merchandiser that provided the following information: AmountNumber of units sold11,000Selling price per unit$ 17Variable selling expense per unit$ 2Variable administrative expense per unit$ 2Total fixed selling expense$ 18,000Total fixed administrative expense$ 14,000Beginning merchandise inventory$ 12,000Ending merchandise inventory$ 23,000Merchandise purchases$ 86,000 Required:1. Prepare a traditional income statement.2. Prepare a contribution format income statement. Cherokee, IncorporatedContribution Format Income StatementSalesVariable expenses:Cost of goods soldFixed expenses:Poquired 4.$187,00000Required 2 Required 1 Required 2Prepare a traditional income statement.Cherokee, IncorporatedTraditional Income StatementSalesCost of goods soldGross marginSelling and administrative expenses:Fixed manufacturing overheadSelling expensesAdministrative expensesSelling expensesNet operating income×›>× $>>>59 x14,00018,000$187,00075,000✔22,000 X32,059Return

Answered: kee Incorporated is a merchandiser that…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Cherokee Incorporated is a merchandiser that provided the following information:

	Amount
Number of units sold	11,000
Selling price per unit	$ 17
Variable selling expense per unit	$ 2
Variable administrative expense per unit	$ 2
Total fixed selling expense	$ 18,000
Total fixed administrative expense	$ 14,000
Beginning merchandise inventory	$ 12,000
Ending merchandise inventory	$ 23,000
Merchandise purchases	$ 86,000

Required:

1. Prepare a traditional income statement.

2. Prepare a contribution format income statement.

Cherokee, Incorporated
Contribution Format Income Statement
Sales
Variable expenses:
Cost of goods sold
Fixed expenses:
Poquired 4.
$
187,000
0
0
Required 2

Required 1 Required 2
Prepare a traditional income statement.
Cherokee, Incorporated
Traditional Income Statement
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses:
Fixed manufacturing overhead
Selling expenses
Administrative expenses
Selling expenses
Net operating income
×›>
× $
>>>
59 x
14,000
18,000
$
187,000
75,000✔
22,000 X
32,059
Return

Expert Solution

Step 1

The income statement explains the financial performance of the company for a particular period of time. It is an important statement that tells whether the company has earned profit or loss.