Profit and Loss Question 3 - CAT 2023
Minu purchases a pair of sunglasses at Rs. 1000 and sells to Kanu at 20% profit. Then, Kanu sells it back to Minu at 20% loss. Finally, Minu sells the same pair of sunglasses to Tanu. If the total profit made by Minu from all her transactions is Rs. 500, then the percentage of profit made by Minu when she sold the pair of sunglasses to Tanu is:
Step-by-Step Explanation
- Transaction 1 (Minu to Kanu):
Minu buys the sunglasses for Rs. 1000 and sells them to Kanu at a 20% profit.
SP₁ = 1000 × 1.20 = Rs. 1200
Minu's Profit from Transaction 1 = 1200 − 1000 = Rs. 200
- Transaction 2 (Kanu back to Minu):
Kanu's cost base is Rs. 1200. He sells the item back to Minu at a 20% loss.
Minu's New CP = 1200 × 0.80 = Rs. 960
- Transaction 3 (Minu to Tanu):
Minu's total consolidated profit from all dealings is Rs. 500.
Since she secured Rs. 200 in the first leg, she must generate the remaining amount in this transaction:
Profit from Transaction 3 = 500 − 200 = Rs. 300
Minu's cost base for this leg is her buy-back price of Rs. 960.
Profit Percentage = 300 / 960 × 100 = 5 / 16 × 100 = 31.25%
Correct Option: C
💡 FundaMakers Tip:
Keep independent internal ledgers for multi-stage transactions. A common pitfall here is calculating the final profit percentage using the original Rs. 1000 cost price. Always base a specific transaction's profit percentage on the immediate cost price incurred for that specific holding (which is Rs. 960).