Two-step transaction on the same capital: Sumit purchases an item for ₹ 4,000 and sells it at a profit of 35%. Using the entire proceeds from that sale, he immediately purchases a second item and sells it at a loss of 20%. Calculate his overall result on the original ₹ 4,000 investment—state clearly whether it is a net gain or a net loss and give the exact rupee amount.

Introduction / Context:
This is a chained profit–loss problem where the selling proceeds of the first transaction become the cost for the next. The concept tested is compounding percentage changes across sequential trades using the same capital base.

Given Data / Assumptions:

• Initial cost price (CP1) = ₹ 4,000.
• First sale at 35% profit.
• Entire proceeds used to buy the second item (so CP2 = SP1).
• Second sale at 20% loss.

Concept / Approach:
Compute SP1 from CP1 with the profit factor. Treat that selling price as the cost for the second purchase. Apply the loss factor to get SP2. Compare SP2 with the original ₹ 4,000 to find the overall net result.

Step-by-Step Solution:
SP1 = 4,000 * (1 + 0.35) = 4,000 * 1.35 = ₹ 5,400CP2 = SP1 = ₹ 5,400SP2 = CP2 * (1 − 0.20) = 5,400 * 0.80 = ₹ 4,320Overall net = SP2 − initial outlay = 4,320 − 4,000 = ₹ 320 gain

Verification / Alternative check:
Overall multiplier on the original outlay = 1.35 * 0.80 = 1.08. So the final outcome should be 8% gain on ₹ 4,000, i.e., ₹ 320. This matches the computed result.

Why Other Options Are Wrong:

• Loss of ₹ 340 / Loss of ₹ 360: contradict the computed gain (sign and amount incorrect).
• Neither gain nor loss: would require an overall multiplier of 1.00, which is not the case (it is 1.08).

Common Pitfalls:

• Averaging 35% and −20% to get +15% (incorrect; the correct method multiplies factors).
• Comparing the second sale with CP2 only and forgetting to relate back to the original ₹ 4,000.

Final Answer:
Gain of ₹ 320