Reliable Fans, Inc. (RF), a hypothetical company, sells high quality fans and has been in business…

Reliable Fans, Inc. (RF), a hypothetical company, sells high quality fans and has been in business since 2006. provides relevant data and financial statement information about RF’s inventory purchases and sales of fan inventory for the years 2006 through 2009. RF uses the LIFO method and a periodic inventory system. What amount of RF’s 2009 gross profit is due to LIFO liquidation?

RF Financial Statement Information under LIFO

2006

2007

2008

2009

Fans units purchased

12,000

12,000

12,000

12,000

Purchase cost per fan

$100

$105

$110

$115

Fans units sold

10,000

12,000

12,000

13,000

Saks price per fan

$200

$205

$210

$215

LIFO Method

Beginning inventory

$0

$200,000

$200,000

$200,000

Purchases

1,200,000

1,260,000

1 520,000

1,380,000

Goods available for sale

1,200,000

1,460,000

1,520,000

1,580,000

Ending inventory*

(200,000)

(200,000)

(200,000)

(100,000)

Cost of goods sold

$1,000,000

1,260,000

$1,320,000

$1,480,000

Income Statement

Saks

$2,000,000

$2,460,000

$2,520,000

$2,795,000

Cost of goods sold

1,000,000

1,260,000

1,320,000

1,480,000

Gross profit

$1,000,000

$1,200,000

$1,200,000

$1515,000

Balance Sheet

Inventory

$200,000

$200,000

$200,000

$100,000

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