A shopkeeper sells an article for $120, making a profit of 20%. What was the cos

A shopkeeper sells an article for $120, making a profit of 20%. What was the cost price of the article?

A shopkeeper sells an article for $120, making a profit of 20%. What was the cost price of the article?

Step 1: Understand that the selling price is $120 and the profit is 20%.
Step 2: Let the cost price be represented by 'x'.
Step 3: Calculate the selling price in terms of the cost price: Selling Price = Cost Price + Profit.
Step 4: Since the profit is 20% of the cost price, we can write it as: Selling Price = x + 0.2x.
Step 5: Combine the terms: Selling Price = 1.2x.
Step 6: We know the selling price is $120, so we set up the equation: 1.2x = 120.
Step 7: To find 'x', divide both sides of the equation by 1.2: x = 120 / 1.2.
Step 8: Calculate the value: x = 100.
Step 9: Conclude that the cost price of the article is $100.

Profit Calculation – Understanding how to calculate cost price from selling price and profit percentage.
Percentage Application – Applying percentage increase to determine the relationship between cost price and selling price.