Cannon Company Operates a Clothing Store That Reported the Following

Essay

Cannon Company operates a clothing store that reported the following operating results for the current year: $$\begin{array} { | l | c | } \hline \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad { \text { Income Statement } } \\\hline \text { Sales revenue } & \$ 2,000,000 \\\hline \text { Cost of goods sold } & ( 1,200,000 ) \\\hline \text { Gross margin } & \$ 800,000 \\\hline \text { Employee commissions and bonuses ( } \$ \% \text { of sales } ) & ( 100,000 ) \\\hline \text { Depreciation expense } & ( 150,000 ) \\\hline \text { Salaries expense } & ( 260,000 ) \\\hline \text { Shipping and delivery expense ( } 2 \% \text { of sales) } & ( 40,000 ) \\\hline \text { Advertising expense } & ( 80,000 ) \\\hline \text { Net income } & \$ 170,000 \\\hline\end{array}$$ Required: Prepare an income statement for Cannon Company using the contribution margin format.