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

Given:

• Cost of goods = Rs. 80,000
• Profit = 20% on sales

When profit is stated as a percentage on sales, it means profit is calculated as a percentage of the selling price (not on cost).

Let Sales Value = $S$

The relationship can be expressed as:

$\text{Profit} = 20\% \text{ of } S = 0.20S$

Also, we know:

$\text{Sales} = \text{Cost} + \text{Profit}$

Substituting the values:

$S = 80,000 + 0.20S$

$S - 0.20S = 80,000$

$0.80S = 80,000$

$S = \frac{80,000}{0.80} = 1,00,000$

Therefore, Gross Profit = Sales - Cost = 1,00,000 - 80,000 = Rs. 20,000

Verification: Profit as percentage of sales = $\frac{20,000}{1,00,000} \times 100 = 20\%$ ✓

The correct answer is Option 3: Rs. 20,000/-