Goods costing ₹80,000/- were sold at a profit of 20% on sales. The amount of gross profit on this sales is.........

₹20,000/-

The correct answer is option 3- ₹20,000/-.

Cost of goods sold = 80,000
Gross profit is 20% on sales

Let sales = x
Gross profit = 20% of x i.e. x/5

Cost of goods sold + gross profit = Revenue from operations
                            80,000 + x/5 = x
x - x/5 = 80,000
4x/5 = 80,000
x = 80,000 x 5/4
   = 1,00,000

Sales = 1,00,000

Gross profit = 1,00,000/5
                  = 20,000