Cannon Company operates a clothing store that reported the following operating results for the current year: Income StatementSales revenue$2,000,000 Cost of goods sold (1,200,000)Gross margin$800,000 Employee commissions and bonuses (5% of sales) (100,000)Depreciation expense (150,000)Salaries expense (260,000)Shipping and delivery expense (2% of sales) (40,000)Advertising expense (80,000)Net income$170,000 Required:Prepare an income statement for Cannon Company using the contribution margin format.
What will be an ideal response?
| Income Statement | |||
| Sales revenue | $ | 2,000,000 | |
| Less variable expenses: | |||
| Cost of goods sold | (1,200,000 | ) | |
| Employee commissions and bonuses (5% of sales) | (100,000 | ) | |
| Shipping and delivery expense (2% of sales) | (40,000 | ) | |
| Contribution margin | $ | 660,000 | |
| Less fixed expenses: | |||
| Depreciation expense | (150,000 | ) | |
| Salaries expense | (260,000 | ) | |
| Advertising expense | (80,000 | ) | |
| Net income | $ | 170,000 | |
Business
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