Three people go to a hotel and get a room for $30. They each pay $10. After they go to their room the manager realizes that he overcharged them, and that the room was supposed to cost $25. He gives $5 to the bellboy to return to the three people.

The bellboy realizes that $5 is difficult to split among three people, so he pockets $2 and then gives $1 to each of the three people.

So now each person has paid $9 (the original $10 minus the $1 that was returned). That means they've paid a total of $27, plus the $2 for the tip, is $29. Where's the extra dollar?