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Cherokee Inc. is a merchandiser that provided the following information:
Amount
Number of units sold . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Selling price per unit . . . . . . . . . . . . . . . . . . . . . . . . $ 30
Variable selling expense per unit . . . . . . . . . . . . . . . $ 4
Variable administrative expense per unit . . . . . . . . . $ 2
Total fixed selling expense . . . . . . . . . . . . . . . . . . . $ 40,000
Total fixed administrative expense . . . . . . . . . . . . . $ 30,000
Beginning merchandise inventory . . . . . . . . . . . . . . $ 24,000
Ending merchandise inventory . . . . . . . . . . . . . . . . $ 44,000
Merchandise purchases . . . . . . . . . . . . . . . . . . . . . $ 180,000
Required:
1. Prepare a traditional income statement.
2. Prepare a contribution format income statement.
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