Purchases of a firm during the year is Rs. 60,000. Opening stock and closing stock for the year is Rs. 12,000 and Rs. 9,000 respectively. Gross profit is $${\frac{1}{5}^{{\text{th}}}}$$ of sales. Amount of gross profit is

Solution (By Examveda Team)

First, we need to calculate the Cost of Goods Sold (COGS).
COGS is calculated as: Opening Stock + Purchases - Closing Stock.
In this case: Rs. 12,000 (Opening Stock) + Rs. 60,000 (Purchases) - Rs. 9,000 (Closing Stock) = Rs. 63,000.
So, the COGS is Rs. 63,000.

Next, we know that Gross Profit is 1/5 (or 20%) of Sales. Let's represent Sales as 'S'.
We also know that Sales - COGS = Gross Profit.
So, S - Rs. 63,000 = (1/5) * S (or 0.2 * S).

Now we can solve for 'S':
S - 0.2S = Rs. 63,000
0.8S = Rs. 63,000
S = Rs. 63,000 / 0.8
S = Rs. 78,750

Now that we have Sales (Rs. 78,750), we can calculate the Gross Profit:
Gross Profit = (1/5) * Sales = (1/5) * Rs. 78,750 = Rs. 15,750

Therefore, the amount of Gross Profit is Rs. 15,750.