Gift shop encounter

[eblc1388]

In accounting class we learned that you cannot ever count profit until an item is actually sold. (Which this item never was. It was just craftily stolen.)

So are you saying the boy only owes the shop ($79 +$18) $97 dollars? It must be this amount if you consider the item not actually sold.

I would consider the item sold in practical terms. It is possible that the fake bill might not be discovered until a month or a year later.

Accounting practices has limitations in situations like this. Also like a car's value depreciated to nothing in a few years but does it actually happens in real life?

I've never seen anyone try to claim what the item was sold for. I've always seen people try and claim what it actually cost them.

My very old color TV cost me $1000 when I bought it and I sold it for $100 on eBay. How much should I claim?

 

[HiTech]

Perhaps we should look at the real cost of this bad business transaction:

Manager eventually closes down the store from revenue losses since he can't seem to make change for customers, and employ measures to detect counterfiet money. He is boo'ed by neighboring businesses. The inventory is sold at below clearance making for a worsening of the situation. He can't collect unemployment since he's self-employed and also loses medical coverage on himself and his family. His child becomes very ill, racking up doctor and hospital fees that cannot be paid. His wife takes on a waitressing job to help pay some of the bills. He begins to take depression meds and consumes alcohol. He hasn't shaved in many weeks and stinks of alcohol and poor personal hygene from their water being periodically shut off from lack of payment. His frustrated wife meets a good looking, successful man at her restaurant, decides to pack up and leave him, taking along their child. He's last seen moping the parks and boulevards, aimlessly walking into rush hour traffic sometimes holding a scribbled on cardboard sign.

All that because some "boy bought a $21 gift, using counterfeit money.
BOTTOM LINE: Don't sell gifts to boys!

 

[dknguyen]

All that because some "boy bought a $21 gift, using counterfeit money.
BOTTOM LINE: Don't sell gifts to boys!

Make sure the girls know that too or there could be consequences.

 

[TekNoir]

My very old color TV cost me $1000 when I bought it and I sold it for $100 on eBay. How much should I claim?

What kept you from selling it for your original $1000? The only correct answer is that you never asked that amount for it or didn't have the patience to wait until it sold for that amount. I have a used-car salesman friend who might have even been able to sell the same television for $2000.

Auctions nearly always net you less money than if you had sold the item outright at a higher asking. The trade off is in time. You get to spend less time selling an item at auction and in return you make less money. If you choose to set a price (an artificial "worth") for the item, then you'll need to wait until you find someone who will pay that price. Any item is only ever worth what it will sell for. Everything else is just an artificial "line". Age (or the artificial "line" under the guise of deprecation) has no impact on what people will pay for an item. (Ah. The motto of the used-car salesman.)

Actually, a similar situation just happened to me recently. I just recently sold a nine year old movie projector, originally purchased for $2300, to a person for $2100. That is what I asked for the item. It was more than worth to me the net loss of $200 for the time that I (and my family and friends) got to enjoy the projector. The projector is hard to find and no longer in production. The "market value" (another wonderful misnomer) of the projector at the time of sale was just under $400. It would sound silly (to me) for me to claim that I made a 525% profit on the item based on the artificial "market value". Market value is only really ever a guess at how much an average person might give for a specific item at that particular moment in time. In actuality, it has little real meaning.

I would claim that you lost $900 on your television, but to you it might have been worth that price. It is all relative and different for each and every individual. All you can ever really count is the amount of money (or other intrinsically, universally valued goods, such as cheques or winning lottery tickets) that has exchanged hands. Everything else is your value for the item... and possibly no one else's.

 

[HarveyH42]

Ah, my two favorite professionals, accountants and lawyers. So many numbers, so many words, so little to do with the real world...

In businesses, losses are a bad thing on paper, and to be polished up a little. No profit, looks much better than loosing profit.

So, if I were looking to sell a store, and everything in it. What would I get out of it? Do I get what the merchandise is priced at on the shelves, what my invoice says I paid for it. How about equipement and fixtures? What was paid new, even though most is worn, slightly damage, but still works great. The property? What I paid 20 years ago?

Insurrance damages? Do get a check only for what each item is actually worth (pre-disaster), cost to replace it, or what you actually spent on it?

The many had a piece of merchandise priced at $21, which I believe mentioned in the OP, was his usually sales price. The operatunity to sell it was taken by the boy, along with $179.

 

[HarveyH42]

What kept you from selling it for your original $1000? The only correct answer is that you never asked that amount for it or didn't have the patience to wait until it sold for that amount. I have a used-car salesman friend who might have even been able to sell the same television for $2000.

Auctions nearly always net you less money than if you had sold the item outright at a higher asking. The trade off is in time. You get to spend less time selling an item at auction and in return you make less money. If you choose to set a price (an artificial "worth") for the item, then you'll need to wait until you find someone who will pay that price. Any item is only ever worth what it will sell for. Everything else is just an artificial "line". Age (or the artificial "line" under the guise of deprecation) has no impact on what people will pay for an item. (Ah. The motto of the used-car salesman.)

Actually, a similar situation just happened to me recently. I just recently sold a nine year old movie projector, originally purchased for $2300, to a person for $2100. That is what I asked for the item. It was more than worth to me the net loss of $200 for the time that I (and my family and friends) got to enjoy the projector. The projector is hard to find and no longer in production. The "market value" (another wonderful misnomer) of the projector at the time of sale was just under $400. It would sound silly (to me) for me to claim that I made a 525% profit on the item based on the artificial "market value". Market value is only really ever a guess at how much an average person might give for a specific item at that particular moment in time. In actuality, it has little real meaning.

I would claim that you lost $900 on your television, but to you it might have been worth that price. It is all relative and different for each and every individual. All you can ever really count is the amount of money (or other intrinsically, universally valued goods, such as cheques or winning lottery tickets) that has exchanged hands. Everything else is your value for the item... and possibly no one else's.

Guess there all kinds of people out there... $2100 for a 9 year old projection TV, could have gotten a brand new, and better one for half that. I guess it's more how you feel about screwing people over on stuff like this. Wonder if they can still get replacement lamps... or is that why you sold it in the first place?

 

[TekNoir]

Guess there all kinds of people out there... $2100 for a 9 year old projection TV, could have gotten a brand new, and better one for half that. I guess it's more how you feel about screwing people over on stuff like this. Wonder if they can still get replacement lamps... or is that why you sold it in the first place?

It is a movie projector, not a projection television. One of the very first high-end first-generation TI-DLP test-models manufactured by inFocus to be exact.

Sometimes newer does not equal better. In fact, with the recent problems that people have been having with recently purchased items breaking down sooner than their past counterparts or items now coming with short-term or extremely limited warranties compared to their predecessors, I would dare say that an older item in good condition would most likely be better than a new one in an unknown condition, so long as it performs as you desire.

He's happy with it and doesn't feel ripped off at all. He was unable to purchase the same model anywhere else at or below that price, period. (He and his friends spend three nights a week watching movies on a 109-inch screen that I helped him set up. He also makes awesome buttered popped-corn, and I'm not one for such a thing.)

The lamps are the same as some more recent models and are readily available from home-theatre audio/video stores which sell such things, or online of course.

I sold it because he liked it and it wasn't being used by me anymore. I needed more direct digital video inputs and so had replaced it nearly two years ago for a model that was more useful to me. I decline to say that it is better. The colour saturation on the model I sold is much better as is the contrast ratio, though that not by much.

I felt it was worth the $2100 and, apparently, so did he. I asked and he declined his needing your assistance in preventing him being "screwed", either now or in the future. I asked in jest, I assure you.

I wouldn't pay $8 million for the aforementioned painting either, but I'm sure somebody else would and they'd be quite happy, proud even, of their purchase. Everything is worth something different to each individual depending on their needs and desires at any given time...

 

[eblc1388]

Let me add some twist to the original scenario:

Suppose the boy after gift purchase went straight to the customer service counter, presented the gift and the receipt and demanded $21 back. Now he leaves the shop with $21+$79=$100 as expected.

Now look at what happens at the shop, assuming the stock level of gift is N before the boy went in:

1. If the boy left with the gift, the shop lost ($100 or $97, we're still arguing). Stock level = N-1

2. If the boy gave up the gift and reclaim the money, the shop lost $100. Stock level = N

Do you see something strange with these two stock level?

 

[Pommie]

If the gift sells for $21, it's worth $21, that's it's value cost+profit. The boy traded worthless paper for a $100 value, gift + $79. The shopkeeper also had to give the neighbor $100 out of his pocket to cover the worthless paper from the boy, another $100. Still say the shopkeeper is out $200.

So, if the shop keeper next door had given it in change to a customer and the customer had noticed it was counterfeit, the loss would have increased to $300? Gift + $79 to boy, $100 to shop keeper next door and $100 to next doors customer!

eblc1388
Great scenario, $100 it is.

Mike.

 

[eblc1388]

Great scenario, $100 it is.

I don't understand fully the significance of the above two scenarios.

The financial position of the shop is different in these cases. Should the shop decided to close immediately and selling off its assets, surely the owner would get more money as in scenario 2 he has one more gift in his shop than scenario 1.

This could also lead to the dire consequence of losing smaller sum of money but worst off in the company's overall financial position.

The question is whether we can/should classify this as a form of tangible "loss" and also include it in the total lost amount.

 

[HiTech]

TekNoir, where I work at, we've sold used, 9yr. old data/video projectors (not "movie" as that's typically reserved for 16mm, 35mm, 70mm film) for a mere $10 in working condition!!! When replacements cost upwards of $350+ and the average light output is under 700 lumens, well they aren't exactly a hot ticket item. The person who gave you $2100 need to have their head examined! I just bought a Pent. IV 1.2GHz machine for $20, less monitor and keyboard. If I ever start up a used car sales lot, I'm hiring you as my first employee. Can you fetch me $20 for selling a $2 bag of play sand to children for their sandboxes?

 

[Pommie]

The second scenario ties in with my Newtonian point of view. For every loss there has to be an equal and opposite gain.

Arguing about liquidation is irrelevant. As you pointed out, the second scenario leaves the stock unchanged and the loss is clearly $100. Had a different customer asked for a refund then the cash and stock position would have been identical, hence the loss has to be $100.

Mike.

 

[bloody-orc]

$97 And that's final.
Do the math if you don't believe!

 

[TekNoir]

TekNoir, where I work at, we've sold used, 9yr. old data/video projectors (not "movie" as that's typically reserved for 16mm, 35mm, 70mm film) for a mere $10 in working condition!!! When replacements cost upwards of $350+ and the average light output is under 700 lumens, well they aren't exactly a hot ticket item.

I called it a movie projector and not a video projector to be more descriptive. I typically call the latter a film projector.

The output is around 1600 ANSI lumens. (Actually 100 more than the one that I replaced it with.) New, similar items typically sell for between $1800 and $3200. The one that I replaced it with retails for $5499.

(By the way, to some people there are more important things than money. I would say that quality of life is very important, at least to me and him. I would guess for others as well, or everyone would squint at their 13-inch b&w television screens while watching the evening news. This is not to mention the billions of other products that people purchase every single minute to "better" their lives, much despite the cost.)

Considering the bulbs alone typically cost between $100 and $300, I might want to get in contact with you if that would be okay. I would have to ask you a little about what make/models you handle and whatnot. $10 would be a steal for me according to their compatibility with recent and newer model projectors.

Either way, I'm taking my portion of this thread to PM. I have gone way off topic and things really are getting more interesting as pertains to the original post.

 

[audioguru]

The shop-keeper didn't lose any money.
Instead he lost his shirt.

 

[HarveyH42]

Wonder if the boy also stuff a few gifts in his pockets...

 

[dknguyen]

Wonder if the boy also stuff a few gifts in his pockets...

And risk getting caught when he already has $70 that the shopkeeper just gave to him?

 

[TekNoir]

And risk getting caught when he already has $70 that the shopkeeper just gave to him?

You stuff your pockets before you scam the shopkeeper...

 

[mcs51mc]

$97 And that's final.
Do the math if you don't believe!

I don't believe you
Show me your math

Here's mine:
Lost 18$ for the gift itself (payed to manufacturer)
Lost 3$ expect profit he will never get for that one gift
Lost 97 real $ to the boy as return for the 100 false $
Lost 100 real $ he had te refund to the shopkeper next door

Total 200$ lost


One can argue about the 3$, because that is money the shopkeeper expect to receive but never will for that one gift taken by the boy.
If in your opinion you can't lose what you don't already have, one can answer 197$.
But in my opnion the shopkeper had these 3$ since it is part of the gift, what brings us back to the original 200$.

 

[dknguyen]

I don't believe you
Show me your math

Here's mine:
Lost 18$ for the gift itself (payed to manufacturer)
Lost 3$ expect profit he will never get for that one gift
Lost 97 real $ to the boy as return for the 100 false $
Lost 100 real $ he had te refund to the shopkeper next door

Total 200$ lost


One can argue about the 3$, because that is money the shopkeeper expect to receive but never will for that one gift taken by the boy.
If in your opinion you can't lose what you don't already have, one can answer 197$.
But in my opnion the shopkeper had these 3$ since it is part of the gift, what brings us back to the original 200$.

You can't include that $100 between the two stores as a loss because they both exchanged equal amounts of money. So he didn't lose that $100. What he did do was take the broken up $100 he got from the other store (which he paid back for later) and give most of it to the boy. The kid was the only one gaining anything in this scenario, and the kid certainly didn't gain $200 so the shopkeeper couldn't have lost it.