303 PM eztomheducationcom TMobile LTE 2 1000 points Cherokee

3:03 PM ezto.mheducation.com T-Mobile LTE 2. 1000 points Cherokee Inc. is a merchandiser that provided the following information: Selling price Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement. Relerencs Book& Resources Financial Statements Difficulty 1 Ea

Solution

CHEROKEE INC

Traditional Income Statement

Particulars

Amount($)

Amount($)

Sales [ 11000 units *$17]

$187000

Cost of goods sold:

Beginning inventory

$12000

Purchases

$85000

Ending inventory

($23000)

Cost of goods sold

($74000)

Gross profit

$113000

Selling expenses:

Variable [11000 units *$2]

$22000

Fixed

$21000

($43000)

Administrative expenses:

Variable [11000 units *$.50]

$5500

Fixed

$13000

($18500)

Net income

$51500

2. CHEROKEE INC.

Contribution Income Statement

Particulars

Amount($)

Sales

$187000

Cost of goods sold

($74000)

Variable selling expenses[11000 units *$2]

($22000)

Variable administrative expenses [ 11000 units *$.5]

(5500)

Contribution margin

$85500

Fixed selling expenses

($21000)

Fixed administrative expenses

($13000)

Net income

$51500.

Particulars	Amount($)	Amount($)
Sales [ 11000 units *$17]		$187000
Cost of goods sold:
Beginning inventory	$12000
Purchases	$85000
Ending inventory	($23000)
Cost of goods sold		($74000)
Gross profit		$113000
Selling expenses:
Variable [11000 units *$2]	$22000
Fixed	$21000	($43000)
Administrative expenses:
Variable [11000 units *$.50]	$5500
Fixed	$13000	($18500)
Net income		$51500