Early one morning Hal, the owner of a hardware store, sells a mailbox for $25 to Courtney that cost him $20 wholesale. Courtney pays with a $100 bill and Hal discovers he doesn’t have enough change. He runs to the jewelry shop next door, where Jack, the owner, gives him change in exchange for the $100. Later that afternoon, Jack discovers the $100 bill is a counterfeit and Hal pays him $100 to make it right.
The total loss was $95. -$20 = The wholesale cost of the mailbox $100 = The money from Jack -$75 = The change paid to Courtney -$100 = To pay Jack back -$20 + $100 – $75 – $100 = -$95
It’s easy to think Hal lost $195 but that fails to account for the $100 used to make the change, which came from Jack, not Hal. Jack paid $100 in exchange for a worthless piece of paper, so the $100 was initially Jack’s loss. Hal had made a $5 profit until Jack’s discovery. If you guessed $100, that’s arguably correct, but not making $5 in profit isn’t a loss in the strictest sense of the word.
I lack much reason, but often rhyme, And require logic to pass the time, To get the words to tell your kin, Look for clues that lie within, Though all are different, they act the same, The answer is practically in the name.
