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I saw a shirt for $97. I borrowed $50 from mom and $50 from dad. I bought the shirt with $3 of change. I gave $1 to mom, $1 to dad, and kept $1 for myself. Now I owe my mom $49 and my dad $49. $49+ $49=$98+my $1=$99. Where did the other $1 go?
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ReplyDeleteLet's try some very simple accounting by comparing two things: what you have and what you owe:
ReplyDelete1. First you have nothing, and you owe nothing:
$0 / $0
2. After your parents give you the money, you have two things:
$100 cash / $100 debt
3. After buying the shirt, you have:
$97 shirt + $3 cash / $100 debt
4. After giving your parents the $2, you have:
$97 shirt + $1 cash / $98 debt
Look at what you have versus what you owe at this point, and notice how correlated the changes in the two sides are (you can see that in point 2. and in point 4.). If you want to take the $1 on the left side, and move it to the right side, it will get there alright, but it will decrease the $98 amount by one, because it means you took the dollar in your pocket and paid off $1 of the debt, reducing it to $97.