Question

Bubba is CFO of Draws and Fades Inc. and D&F Inc. has deposited $2,000 in checks received from customers. It as written $1,400 in checks to its suppliers. The initial balance was $400. If $1,600 of its customers checks have been cleared but only $600 of its own, calculate its float.

Select one:

A. $200

B. $400

C. $300

D. $700

Answer 1

Solution :

Calculation of bank balance :

As per the information given in the question we have

Initial balance = $ 400   ; Checks of customers cleared by bank = $ 1,600 ;   Checks of its own cleared by bank = $ 600   ;

Thus Bank balance = Initial balance + Checks of customers cleared by bank - Checks of its own cleared by bank

= $ 400 + $ 1,600 - $ 600

= $ 1,400

Thus the bank balance after accounting for checks of customers and its own = $ 1,400

Calculation of book balance :

As per the information given in the question we have

Initial balance = $ 400 ; Checks of customers deposited = $ 2,000 ;   Checks written by it to its customers = $ 1,400   ;

Thus Book balance = Initial bank balance + Checks of customers deposited + Checks written by it to its customers

= $ 400 + $ 2,000 - $ 1,400

= $ 1,000

Thus the book balance after accounting for checks of customers and its own = $ 1,000

Thus the float = Bank balance after accounting for checks of customers and its own - Bank balance after accounting for checks of customers and its own

= $ 1,400 – 1,000

= $ 400

Thus the solution is option B. $ 400