A store buys an item for $\$50$.
They price it then, at $\$80$ ($\$30$ profit margin).
A customer buys the item from them with a fake $\$100$ note.
The store returns $\$20$ to the customer.
My question is, how much loss did the store incur? Is it
(1) $\$50 + \$20 = \$70$; or
(2) $\$80 + \$20 = \$100$?
(2) seems to be correct. But what exactly is the definition of loss here? Should it be calculated on the store's selling or cost price?