Example 1
Suppose goods purchased for Rs 100+5% vat
total purchase prive =105
It is sold at 20% profit
Sales price=120
Vat 5%=6
Total=126
Profit earned=120-100=20
Example 2
Suppose goods purchased for Rs 100 (5% vat inclusive)
Purchase price=100*100/105=95.23
Vat =5%=4.77
Total=100
It is sold at 20% profit i.e. at 120(vat inclusive)
Sales Price=120*100/105=114.28
Vat 5%=4.72
Total=120
Profit earned=114.28-95.23=19.05
Written on March 31, 2017, 6:53 p.m.