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vfiekz [6]
3 years ago
7

Cherokee Inc. is a merchandiser that provided the following information: Amount Number of units sold 20,000 Selling price per un

it $ 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.
Business
1 answer:
Alex3 years ago
7 0

Answer:

1) Traditional Income Statement

Particulars                                               Value                  Total Amount

Sales 20,000 units @ $30 =                                             $600,000

Less: Manufacturing Expenses

Cost of goods sold  $24,000 + $180,000 - $44,000      $160,000

Gross Margin                                                                       $440,000

Less: Operating Expenses

Administrative Expense                               $70,000

Selling expense                                            $120,000        $190,000

Operating Income                                                                 $250,000

Note: In traditional statement fixed and variable are not segregated and only direct cost associated is subtracted to calculate cost of goods sold, then gross margin is calculated. After that selling and administration expenses are deducted to calculate net operating income.

2) Contribution format income Statement

Particulars                                                                         Total Amount

Sales 20,000 units @ $30 =                                             $600,000

Less : Variable Costs

Cost of goods sold    $24,000 + $180,000 - $44,000      $160,000

Variable selling expense $4 X 20,000                               $80,000

Variable Administrative Cost $2 X 20,000                         $40,000

Contribution Margin                                                             $320,000

Less: Fixed Cost

Fixed Selling expense                                                            $40,000

Fixed Administration Expense                                               $30,000

Net operating Income                                                            $250,000

Note: In contribution statement fixed and variable expenses are segregated and firstly after deducting variable expense contribution margin on sales is calculated, and then after that deducting fixed cost we get net operating income.

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3 years ago
On January 1, 2019, Oriole Company purchased the following two machines for use in its production process.
ivolga24 [154]

Answer and Explanation:

The journal entries are shown below:

1  Equipment   $53,420

     To Cash  $53,420

(Being the equipment is purchased for cash is recorded)

The computation is given below:

= Cash price of machine + sales tax + shipping cost + insurance during shipping + installation and testing cost

= $49,500 + $3,650 + $100 + $60 + $110

=  $53,420

2. Depreciation expense $9,614

      To Accumulated Depreciation - Equipment  $9,614

(Being the depreciation expense is recorded)

The computation is shown below:

= ($53,420 - $5,350) ÷ ( 5 years)

= $9,614

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3 years ago
Edward is a partner in ENS, Ltd. The partnership generated a loss during the current year. Edward's share of the loss was $7,000
antiseptic1488 [7]

Answer:

Edward can deduct his $7,000 loss from his adjusted gross income (AGI). Partnerships are investments that you make regardless of whether you work for them or not. One of the key characteristics of partnerships is that they are not taxed as separate entities, they pass-through their income or losses to the  partners.

3 0
3 years ago
The only skill required of managerial accountants is that they have a solid knowledge of both financial and managerial accountin
abruzzese [7]

Answer:

False

Explanation:

we could see the following difference between Managerial and Financial accounting

Managerial Accounting

  • Primary User: Internal
  • Purpose of Information: To help managers make decisions
  • Focus: Segments
  • Frequency: As needed
  • Auditing: Not subject to audit
  • Required: No
  • Time Frame Focused:Future

Managerial Accounting

  • Primary User: External
  • Purpose of Information: To help investor and creditor make decisions
  • Focus: Entire organization as a whole
  • Frequency: Quarterly and annually
  • Auditing: Publicly held companies are audited
  • Required: Required by GAAP, SEC, IRS, and others
  • Time Frame Focused: Past (historical transactions)

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Answer:

quota sample is the correct answer.

Explanation:

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