Goods costing ₹ 60,000 sold to Manish at a profit of 25% on sales less Trade Discount @ 5%.
Calculate the amount to be shown in Sales Account:

Correct option is B

The correct answer is (b) ₹76,000.

Explanation:
• Cost Price (C.P.) = ₹60,000
• Profit = 25% on Sales → Let Selling Price before Trade Discount = ₹x
 Then, Cost = 75% of ₹x → 0.75x = 60,000 → x = ₹80,000
• Trade Discount = 5% on ₹80,000 → ₹4,000
• Net Sales = ₹80,000 – ₹4,000 = ₹76,000
Therefore, the amount to be shown in the Sales Account = ₹76,000

(Correction: Wait! The profit is 25% on sales, not on cost — so let’s recheck step-by-step precisely.)

Let Selling Price before discount = ₹x
Then Cost = ₹60,000 = 75% of ₹x → ₹x = ₹80,000
After 5% trade discount → ₹80,000 × (1 – 0.05) = ₹76,000

Final Sales Account value = ₹76,000

Information Booster:
• Trade Discount is given to encourage bulk purchases — not recorded in accounts.
• Cash Discount is recorded in accounts as an expense or income.
• Profit on Sales means profit is calculated based on the selling price.
• If profit were 25% on cost, selling price would be higher than when it’s 25% on sales.
• Sales Account always records the net amount after trade discount.