Profit loss

Calculation of closing stock:

Purchases:Rs.10,000            Sales:Rs.9,000         Margin is 20% on cost

In the given case it is 1/5 on cost i.e., 1/5*100=20% which means 1/6 on sales hence, 

Rs.9,000*1/6 = Rs.1,500 which is margin added

by deducting margin from sales balance would be Rs.7,500(9000-1500)

If the Opening Stock is NIL then purchases-sales at cost which is 10,000-7,500 = Rs.2,500 which is nothing but the Closing Stock

Then, 1/5 on sales Rs.9,000*1/5=Rs.1,800 which is margin on deduction from sales it is Rs.7,200(9000-1800)

Closing Stock=10,000-7,200=Rs.2,800 which is closing stock in case II