Counterfeit Money

A man goes into a barber shop and gets a haircut for $15. He pays the barber with a $20 bill, but the barber doesn’t have change. The barber goes to the neighboring flower shop and trades the $20 bill for a $10 dollar bill and two $5 bills. Then he gives the man his $5 in change.

Later the lady from the flower shop confronts the barber and tells him that the $20 bill he gave her was counterfeit money. The barber agrees and he gives the lady a different $20 bill.

Later that day he tries to figure out how much money he lost. How much money did the barber lose?


The barber lost $5 in cash.

The lady from the flower shop gave $20 to the barber and eventually got her $20 back.

The man who got the haircut, gave nothing except the counterfeit money and got $5 back. So the barber lost $5 in cash but lost $15 in revenue as he got counterfeit money for the haircut.

Let’s say the barber had $20 initially. He got a $20 bill for the haircut and after paying the man the $5 change, he had a balance of $35. The barber then gave $20 to the lady from the flower shop in exchange for the counterfeit money which brought his balance to $15. So, the barber made a loss of $5, since his balance after the haircut was $15 from the initial amount of $20.

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