# Early one morning Hal, the owner of a hardware store, sells a mailbox for $25 to Courtney that cost him$20 wholesale

Question: 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.

What was Hal’s total loss?

Answer: 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.