Solve this simple math problem (you may not get it right :D)

[Kirosia]

Quote:

Originally Posted by beerguy0 The two statements in bold above don't make sense. The neighbor gave you $100, not the reverse. You gave the neighbor $10 change. Sounds like a scam to me

Yeah they do. Customer gave you a $100 bill, and you went to the neighbor store to exchange it for smaller bills (20s and 10s). Neighbor store found out it was fake, and wanted 100 real smackers to cover the money you already took from him.

 

[seacard]

The answer is so obviously $90 that I don't understand where the confusion is. Unless it's a play on words, there is nothing tricky to this problem

 

[F1GTR]

Quote:

Originally Posted by seacard The answer is so obviously $90 that I don't understand where the confusion is. Unless it's a play on words, there is nothing tricky to this problem

Now that I've gone back and worked it out on paper I have to agree.

How can it not be $90? $80 for the headphone you no longer have and $10 for the change?

 

[Kirosia]

Quote:

Originally Posted by seacard The answer is so obviously $90 that I don't understand where the confusion is. Unless it's a play on words, there is nothing tricky to this problem

The thread starter said that all the answers so far were incorrect. Either there's something tricky-icky, or he's wrong. But from reading the comments of the thread, I suspect the former...

 

[jjcha]

Heh, I'm procrastinating on doing my real accounting homework, so here are some very rudimentary financial statements (yes, I know the loss wouldn't be accounted this way, but let's keep it simple). I'm assuming no taxes and no other transactions.

Starting Balance Sheet
Cash 0
Capital 0

Capital Contribution of 90 at the beginning of the year in Cash (so we don't have to deal with payables)
Debit Cash 90
Credit Capital 90

Balance Sheet
Cash 90
Capital 90

Quote:

Originally Posted by chesebert You are a headphone seller. You bought a headphone for $80

Credit Cash 80
Debit Inventory 80

Balance Sheet
Cash 10
Inventory 80
Capital 90

Quote:

Originally Posted by chesebert A customer bought the headphone, and gave you $100.

Income Statement
Revenue 90
COGS 80
Net Income 10

Debit Cash 100
Credit Inventory 80
Credit Change Payable 10
Credit Capital (I'm just lumping Retained Earnings with Capital) 10

Balance Sheet
Cash 110
Inventory 0
Change Payable 10
Capital 100

Quote:

Originally Posted by chesebert You don't have any changes so you went to the neighbor store to change $100 for 20s and 10s

(no meaningful impact on financial statements)


Quote:

Originally Posted by chesebert You gave $10 change to the customer.

Credit Cash 10
Debit Change Repayable 10

Balance Sheet
Cash 100
Capital 100

Quote:

Originally Posted by chesebert Later that day, the neighbor told you that the $100 you gave them was fake, so you gave them another $100.

Income Statement
Fraud Expense Adjustment 100

New Income Statement
Revenue 90
COGS 80
Fraud Expense 100
Net Income -90

Credit Cash 100
Debit Capital 10 (to undo prior Net Income entry)
Debit Capital 90 (to reflect new Net Loss)

(You can gross up the last two, but they're broken out here for clarity)

Balance Sheet
Cash 0
Retained Earnings 0
Capital 0

Cash Flow Statements
Indirect Cash Flow Statement
Net Income -90
(No adjustments due to changes in balance sheet items)
Operating Cash Flow -90

Financing Cash Flows
Capital Contributions 90
Investing Cash Flows 90

Net Cash Flow 0

Checks - balance sheet balances, Cash account changes by Net Cash Flow.


Quote:

Originally Posted by chesebert How much are you in the red? (please give a short explanation)

Net Income (Loss) = -90

Best,

-Jason

Postscript: Oh heck, for kicks, here's the Direct Cash Flow Statement
Cash to Customers -10
Cash to Suppliers -80
Cash from Neighbor 100
Cash to Neighbor -100
Operating Cash Flow -90

Check - Direct Operating Cash Flow = Indirect Operating Cash Flow

 

[laxx]

you bought the headphones for $80, so
-$80
guy pays you a $100
+$100
you go to the store to exchange for change
=====
you give back $10 bucks
-$10
+$10

then you find out the $100 you got was fake, and you have to pay your neighbor back
-100
you no longer own the headphones
-$80
you still have the $10 that you exchanged with your neighbor
+$10

so in the end, you end up $170 in the red.

 

[PYROphonez]

I would like to say you're out a total of $280.

However, there is possibly missing information. No taxes in this supposed area?

 

[chesebert]

Quote:

Originally Posted by jjcha Heh, I'm procrastinating on doing my real accounting homework, so here are some very rudimentary financial statements (yes, I know the loss wouldn't be accounted this way, but let's keep it simple). I'm assuming no taxes and no other transactions. Starting Balance Sheet Cash 0 Capital 0 Capital Contribution of 90 at the beginning of the year in Cash (so we don't have to deal with payables) Debit Cash 90 Credit Capital 90 Balance Sheet Cash 90 Capital 90 Credit Cash 80 Debit Inventory 80 Balance Sheet Cash 10 Inventory 80 Capital 90 Income Statement Revenue 90 COGS 80 Net Income 10 Debit Cash 100 Credit Inventory 80 Credit Change Payable 10 Credit Capital (I'm just lumping Retained Earnings with Capital) 10 Balance Sheet Cash 110 Inventory 0 Change Payable 10 Capital 100 (no meaningful impact on financial statements) Credit Cash 10 Debit Change Repayable 10 Balance Sheet Cash 100 Capital 100 Income Statement Fraud Expense Adjustment 100 New Income Statement Revenue 90 COGS 80 Fraud Expense 100 Net Income -90 Credit Cash 100 Debit Capital 10 (to undo prior Net Income entry) Debit Capital 90 (to reflect new Net Loss) (You can gross up the last two, but they're broken out here for clarity) Balance Sheet Cash 0 Retained Earnings 0 Capital 0 Cash Flow Statements Indirect Cash Flow Statement Net Income -90 (No adjustments due to changes in balance sheet items) Operating Cash Flow -90 Financing Cash Flows Capital Contributions 90 Investing Cash Flows 90 Net Cash Flow 0 Checks - balance sheet balances, Cash account changes by Net Cash Flow. Net Income (Loss) = -90 Best, -Jason

nicely done..but incorrect

 

[Born2bwire]

Heh reminds me of the thread at Anandtech where someone posted saying that their professor asked them to solve a "Seven Bridges of Koenigsberg" problem claiming that there was a solution and asked the forum for the solution.

 

[chesebert]

the problem is construed to what's written. No need to consider any outside information.

 

[philodox]

Ohhhh

I think I've got it.

You are $100 in the hole since though the buyer gave you $100, the asking price was $90... which means the rest was tax and/or shipping.

 

[jjcha]

Quote:

Originally Posted by chesebert nicely done..but incorrect

I read the answer you gave to Zanth.

As an accountant, your answer is wrong as it is not in compliance with GAAP.

As an economist, your answer is wrong because there is an infinite supply of headphones and thus no lost opportunity cost when the next customer comes for a purchase.

[EDIT NOPE, I'M WRONG HERE]As a lawyer, your answer is wrong because you can't win a suit under contract law unless the good is unique and you can prove that you would have had another sale had you not been defrauded.[/EDIT]

Best regards,

-Jason

 

[F1GTR]

LOL. I'm with Jason on this one.

There's no correct answer here but a trick answer.

 

[bhd812]

""How much are you in the red?""

you bought the headphones at $ 80.00
ok so the customer came in and gave you $100.
you got change in 4 $20 bills and 2 $10 bills.
you gave the customer $10.00 back
the customer walked out paying a total of $90.00 for the headphones

So far your up $10.00 but you have 4 $20 bills and one $10 bill.
($90-$80=$10)

but later you find out the $100.00 the customer gave was fake, so you gave them another $100.00

now if you did NOT get your orignal $100.00 bill you gave back then you would be down $10.00 cause you still have the 4 $20 bills and the 1 $10 bill minus the $100 you gave out of you pocket..

unless you got the fake $100.00 back then you would be down nothing but up $10.00

I think the first down at $10.00 is rite...

well?

 

[IEATTEFLON]

-80
+100(fake)
:100 (change)
-10 (change)
-100 (exchange for fake)

you would be out -$190.00

or -$290.00 if the neighbor didnt give your fake back.