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

[JahJahBinks]

Quote:

Originally Posted by StevieDvd First I have not read everyone's replies but as there are still answers coming forward here's mine Answer = $100 Reason: After selling the headphones and changing notes etc you're finance is at equilibrium, you are happy but have a zero balance in your bank account. Neighbour brings you the counterfeit so you have to go overdrawn to replace it, you are now $100 in the red. May be the cans were only really worth $10 or are now worth $1000; or you are unsured for this and would get $150 back - all of this is moot since it's not part of the question. You had a real $100 and now you don't. Steve

It is not 100.
When the neighbor gives you $100 for the fake bill, you give $10 to the buyer, so you end up with $90 (this part is where most people don't get). The next day you had to give away $100 back to the neighbor, so you end up $10 in red, plus the $80 headphones you originally paid for, you are $90 in red.

Think of it as the physics law of conservation, the buyer used a $100 fake bill to get $80 worth of headphones and $10 change, so he earned $90 with a fake bill. Since your neighbor demanded from you $100 next day, he does not lose or gain anything in this transaction. So by law of conservation, whatever goes in must be coming out to keep the state in equilibrium. The $90 gained by the bad guy is the amount you lose.

 

[Kees]

Quote:

Originally Posted by StevieDvd First I have not read everyone's replies but as there are still answers coming forward here's mine Answer = $100 Reason: After selling the headphones and changing notes etc you're finance is at equilibrium, you are happy but have a zero balance in your bank account. Neighbour brings you the counterfeit so you have to go overdrawn to replace it, you are now $100 in the red. May be the cans were only really worth $10 or are now worth $1000; or you are unsured for this and would get $150 back - all of this is moot since it's not part of the question. You had a real $100 and now you don't. Steve

I think you are right. It is exactly as I stated too and I think it is obvious. I still don't understand why Chesebert reacted with: "This is an incorrect analysis, doesn't make any sense”.

 

[beerguy0]

Quote:

Originally Posted by JahJahBinks It is not 100. When the neighbor gives you $100 for the fake bill, you give $10 to the buyer, so you end up with $90 (this part is where most people don't get). The next day you had to give away $100 back to the neighbor, so you end up $10 in red, plus the $80 headphones you originally paid for, you are $90 in red. Think of it as the physics law of conservation, the buyer used a $100 fake bill to get $80 worth of headphones and $10 change, so he earned $90 with a fake bill. Since your neighbor demanded from you $100 next day, he does not lose or gain anything in this transaction. So by law of conservation, whatever goes in must be coming out to keep the state in equilibrium. The $90 gained by the bad guy is the amount you lose.

-$80 (wholesale cost of cans)
+100 amount tendered
-$10 change to customer
You are now +$10
-$100 replacing counterfeit $100
You are now -$90

I agree with the above. I also fail to see what being a headphone dealer has to do with anything.

 

[pezzy]

haha i have to say jjcha's approach to answering this problem is the best. Im studying to become an accountant, i would have never considered answering this like the way he did .

 

[chesebert]

Quote:

Originally Posted by beerguy0 -$80 (wholesale cost of cans) +100 amount tendered -$10 change to customer You are now +$10 -$100 replacing counterfeit $100 You are now -$90 I agree with the above. I also fail to see what being a headphone dealer has to do with anything.

Dealer lost profit from lost sales volume. Had the dealer sold it someone else the dealer would be up $10. So the fake $100 bill depletes the dealer's sales to the extent of one headphone and the measure of damage should be the dealer's profit on one sale. so the $10 really is the opportunity cost.
The total loss = substantive loss ($90) + Lost Profit ($10) = $100

 

[Dimitris]

I still dont get it. You lose the cans which is 80$. You give the bad guy $10 on top. You need to pay the neighbor $100. So thats $190. Now if you mention opportunity cost as well then that brings you up to $200.

 

[hongda]

Don't forget that he got 100 dollars worth of change back from the neighbor which brings him down to 100 in the red.

 

[JahJahBinks]

yes, he got $100 worth of change from neighbor and gives out $10, so he has a surplus of $90.

 

[Dimitris]

True. Ok then I guess its $90 except if you add opportunity cost $10. If the problem involves lost time of sales person etc etc I am going to be mad.

 

[Febs]

Quote:

Originally Posted by chesebert Dealer lost profit from lost sales volume. Had the dealer sold it someone else the dealer would be up $10. So the fake $100 bill depletes the dealer's sales to the extent of one headphone and the measure of damage should be the dealer's profit on one sale. so the $10 really is the opportunity cost. The total loss = substantive loss ($90) + Lost Profit ($10) = $100

You are assuming that the dealer passed up another sale to sell to the customer who defrauded him. This is inconsistent with your prior statement that all information needed to solve the problem is contained in the hypothetical. Nowhere in the hypothetical does it say that the dealer gave up a sale.

This is your hypothetical you posed:
Quote:

You are a headphone seller. You bought a headphone for $80 and plans to sell it for $90 A customer bought the headphone, and gave you $100. You don't have any changes so you went to the neighbor store to change $100 for 20s and 10s You gave $10 change to the customer. Later that day, the neighbor told you that the $100 you gave them was fake, so you gave them another $100.

But this is the hypothetical that you are answering:
Quote:

You are a headphone seller. You bought a headphone for $80 and plan to sell it for $90. Customer A agrees to buy the headphone for $90 and gives you a $100 bill. Customer B enters the store and asks to buy the headphone for $90. You explain that you have only one in stock and that it is already sold. Customer B leaves the store, never to return. You don't have any change for Customer A so you go to the neighbor store to change $100 for 20s and 10s You gave $10 change to the customer. Later that day, the neighbor told you that the $100 you gave them was fake, so you gave them another $100.

 

[StevieDvd]

Quote:

Originally Posted by JahJahBinks It is not 100. When the neighbor gives you $100 for the fake bill, you give $10 to the buyer, so you end up with $90 (this part is where most people don't get). The next day you had to give away $100 back to the neighbor, so you end up $10 in red, plus the $80 headphones you originally paid for, you are $90 in red. Think of it as the physics law of conservation, the buyer used a $100 fake bill to get $80 worth of headphones and $10 change, so he earned $90 with a fake bill. Since your neighbor demanded from you $100 next day, he does not lose or gain anything in this transaction. So by law of conservation, whatever goes in must be coming out to keep the state in equilibrium. The $90 gained by the bad guy is the amount you lose.

It is $100.

Try this?

Go into any shop and ask to see a $100 bill - tell them it's counterfeit and confiscate it. Now ask them how much they are down!

Any further debate about cost of headphones etc is speculation on what the question could be which could include food bills, loss of salary and so on. It's a simple answer to a simple question, if the question mentioned net loss then that's a different matter.

 

[beerguy0]

Quote:

Originally Posted by chesebert Dealer lost profit from lost sales volume. Had the dealer sold it someone else the dealer would be up $10. So the fake $100 bill depletes the dealer's sales to the extent of one headphone and the measure of damage should be the dealer's profit on one sale. so the $10 really is the opportunity cost. The total loss = substantive loss ($90) + Lost Profit ($10) = $100

Accounting mumbo-jumbo. As a straight math problem, -$90 is correct. You post title should have been "Solve This Simple Accounting Problem". Math and Accounting are two entirely different fields.

(My wife is a bookkeeper, and has been working on her accounting degree, so I hear this stuff all the time. And I still think it's a bunch of BS. See Enron.)

 

[JahJahBinks]

Quote:

Originally Posted by StevieDvd It is $100. Try this? Go into any shop and ask to see a $100 bill - tell them it's counterfeit and confiscate it. Now ask them how much they are down! Any further debate about cost of headphones etc is speculation on what the question could be which could include food bills, loss of salary and so on. It's a simple answer to a simple question, if the question mentioned net loss then that's a different matter.

The question asks for how much money did you earn/lose starting with you paid $80 for a pair of headphones, not starting with you need to to pay $100 back to your neighbor. In other words, if the intention of this problem was simply asking how much they are in the red if you go into any shop and ask to see a $100 bill - tell them it's counterfeit and confiscate it, then whoever created this problem first would not waste time adding other conditions in.

To answer a problem you always want to put yourself in the problem creator's shoes in order to understand what the problem is really asking despite how it is worded.

 

[cclragnarok]

Quote:

Originally Posted by chesebert Dealer lost profit from lost sales volume. Had the dealer sold it someone else the dealer would be up $10. So the fake $100 bill depletes the dealer's sales to the extent of one headphone and the measure of damage should be the dealer's profit on one sale. so the $10 really is the opportunity cost. The total loss = substantive loss ($90) + Lost Profit ($10) = $100

Your answer depends on the assumption that there are other customers out there to buy your headphones at $90. It's possible that NOBODY would buy the headphones at $90, since the headphones might be worth only $80 (or even less). The only reason you got a buyer is that he doesn't care he wastes his money since it's fake money anyway. EDIT: I see that Febs already said pretty much the same thing.

Also, if we do it your way, Kees' answer is absolutely right. Everything except the fake $100 bill is usual business operations, so paying for the fake $100 is your total loss.

 

[StevieDvd]

Had not realised the basics had been edited too and it was now a dealer and not a person. When I rechecked the sentence with the ? it said "How much are you in the red?" - should have re-read the first thread again.

So on second reading it's more like a banking/accounting question

Cash terms you are:
-80 to buy headphones
-10 you give to the fraudster
+10 (change from neighbour)
-100 you give to the neighbour (10 from the till you had left)

Nett cash movement -180

Stock is either an insured or unisured loss and has not been realised yet(accounting term). We don't know if there is insurance let alone the terms so any offset is pure guesswork.

That better?