You are in the business of selling rugs and use the FIFO method of inventory costing. The inventory available for sale for a particular style of rug is as follows:

Inventory Purchase Date	Current Inventory	Cost
June 14	4	at $1,400 each
June 21	3	at $1,500 each
July 5	6	at $1,700 each

You immediately replace those rugs with 3 new rugs at a cost of $2,300 apiece. Respond to the following in a minimum of 175 words: What is your gross profit from the sale of the rugs? What is your net cash flow from the sale of the rugs and the subsequent purchase of 3 new rugs? Why is there a substantial difference between gross profit and cash flow? What other circumstances can lead to differences like those illustrated in this case?