Charlies\' writes 135 checks a day for an average amount of $480 each. These che
ID: 2679020 • Letter: C
Question
Charlies' writes 135 checks a day for an average amount of $480 each. These checks generally clear the bank in 3 days. In addition, the firm generally receives an average of $159,000 a day in checks that are deposited immediately. Deposited funds are available in 1.5 days. What is the firm's net float?Choose one
a. Net disbursement float of $94,200
answer.
b. Net disbursement float of $44,100
c. Net disbursement float of $34,750
d. Net collection float of $44,100
e. Net collection float of $94,200
Explanation / Answer
The answer is a net collection float of 44,100
This was found by first finding the disbursement float which was done by multiplying the total amount of checks written per day by the number of days it takes for the checks to clear.
(135 * $480) * 3 = 194,400
Then you find the collection float by multiplying the amount the firm recieves in a day by the number of days it takes for the funds to be available.
(159,000 * 1.5) = 238,500
Then you subtract the collection float from the disbursement float and you get the net float.
194,400 - 238,500 = -44,100 or 44,100 collection float