Quantitative Aptitude :: Profit and Loss - Discussion

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Explanation:
Given Cost price of watch = 400
and Gain% = 20% of SP
20%of SP = SP - CP
CP = SP(1-20/100)
=> CP = SP*4/5
=> SP = CP * 5/4
=>SP = 400*5/4
=> SP = Rs. 500

NOTE:
If the question if it would have given like"purchased for Rs. 400 and sold it at a gain of 20% of the Cost price ?"
Then
Given Cost price of watch = 400
and Gain% = 20%
Gain = 400 * 20/100 = 80
Cost price = (400 + 80) = 480

As in this questions it has given "purchased for Rs. 400 and sold it at a gain of 20% of the Selling price ?"