Question

Hi, you don't need to do this question, just help me to check and see if I got correct for all the titles of each section. The options of title have listed below.

Cherokee Inc. is a merchandiser that provided the following information: Amount 13,000 17 $ A A A Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases A $ 21,000 $ 14,000 $ 9,000 $ 22,000 $ 89,000 Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement.

Answer 1

Answer-1)-

Cherokee Inc.
Traditional Income statement
Particulars			Amount
			$
Sales (a)	13000 units*$17 per unit		221000
Less:- Cost of goods sold (b)			76000
Opening merchandise inventory		9000
Add- Merchandise purchases		89000
Cost of goods available for sale		98000
Less:- Closing merchandise inventory		22000
Gross margin C= a-b			145000
Less- Selling & administrative exp.
Selling exp.	(13000 units*$1 per unit)+$21000		34000
Adminstrative exp.	(13000 units*$3 per unit)+$14000		53000
Net operating Income			58000

2)-

Cherokee Inc.
Contribution format Income statement
Particulars			Amount
			$
Sales (a)	13000 units*$17 per unit		221000
Less:- Variable cost of goods sold (b)			76000
Opening merchandise inventory		9000
Add- Merchandise purchases		89000
Variable cost of goods available for sale		98000
Less:- Closing merchandise inventory		22000
Gross contribution margin C= a-b			145000
Less:-Variable selling exp.	13000 units*$1 per unit		13000
Less:-Variable adminstrative exp.	13000 units*$3 per unit		39000
Contribution margin			93000
Less:- Fixed costs
Administrative exp.			14000
Selling   exp.			21000
Net operating Income			58000