Answered

Find the information you're looking for at Westonci.ca, the trusted Q&A platform with a community of knowledgeable experts. Get expert answers to your questions quickly and accurately from our dedicated community of professionals. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

Exercise 1-6 (Algo) Traditional and Contribution Format Income Statements [LO1-6] Cherokee Incorporated is a merchandiser that provided the following information: Amount Number of units sold 12,000 Selling price per unit $ 17 Variable selling expense per unit $ 1 Variable administrative expense per unit $ 2 Total fixed selling expense $ 21,000 Total fixed administrative expense $ 13,000 Beginning merchandise inventory $ 11,000 Ending merchandise inventory $ 22,000 Merchandise purchases $ 89,000 Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement.

Sagot :

Answer:

The net operating income is $56,000

Explanation:

1. The traditional imcome statement:

2. The contribution format income statement:

Working Note:

[tex]\\\text{Sale revenue}=12,000*\$17=\$204,000\\\text{Variable selling expense}=12,000*\$1=\$12,000\\\text{Variable administrative expense}=12,000*\$2=\$24,000\\\text{Cost of goods sold}&=\text{Beginning merchandise inventory}+\text{Merchandise purchase}-\text{Ending merchandise Inventory}\\&=\$11,000+\$89,000-\$22,000\\&=\$78,000\\\text{Selling expense}=\$12,000+\$21,000=\$33,000\\\text{Administrative expense}=\$24,000+\$13,000=\$37,000[/tex]

View image tanisha3020
View image tanisha3020
Visit us again for up-to-date and reliable answers. We're always ready to assist you with your informational needs. We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.