Question

Good costing 200000 were sold at 20 %profit on sales and 60 %amount was received in cash

Answer 1

Cost of goods = 200000

Profit on sales = 20% or 1/5

Then profit on cost will be = 25% or 1/4
.
Therefore Sale price will be 200000 plus 25% = 200000+50000=250000

so Sales = 250000

Cash recieved on this sales transaction is 60% of total amount.. 250000 × 60% = 150000

Remaining amount will obviously be considered as 'Credit'

So the accounting treatment will be

Sales a/c Dr. 250000
To. Cash a/c 150000
To. Debtor's a/c. 100000