On a typical day, a company writes 72 checks worth a total of $10,540 that clear...

On a typical day, a company writes 72 checks worth a total of $10,540 that clear in 2.25 days. The company also collects 85 checks worth a total of $14,635 that clear in 1.75 days. Is this a collection or disbursement float? What is the float value? Multiple Choice A collection float of $2,053 A collection float of $4,095 A disbursement float of $1,896 A collection float of $1,896 A disbursement float of $4,095

Solutions

Expert Solution

Solution :

The formula for calculating the Disbursement float = Total Amount disbursed through checks * No. of days required for check clearance

As per the information given in the question we have

Total Amount disbursed through checks = $ 10,540 ; No. of days required for clearance = 2.25 days ;

Thus the Disbursement float = $ 10,540 * 2.25 = $ 23,715

The formula for calculating the Collection float = Total Amount collected through checks * No. of days required for check clearance

As per the information given in the question we have

Total Amount collected through checks = $ 14,635 ; No. of days required for clearance = 1.75 days

Thus the Collection float = $ 14,635 * 1.75 = $ 25,611.25

Since the collection float is greater than disbursement float, the float is a collection float.

Thus the Net collection Float is = Collection float - Disbursement float

= $ 25,611.25 - $ 23,715

= $ 1,896.25

= $ 1,896 ( when rounded off to the nearest whole number )

The collection float = $ 1,896

Thus the solution is Option 4: A collection float of $ 1,896

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

On a typical day, a company writes 79 checks worth a total of $10,680 that clear...

On a typical day, a company writes 79 checks worth a total of $10,680 that clear in 2.25 days. The company also collects 92 checks worth a total of $14,740 that clear in 1.75 days. Is this a collection or disbursement float? What is the float value?

On a typical day, PPC writes $1,000 in checks. Generally, those checks take four days to...

On a typical day, PPC writes $1,000 in checks. Generally, those checks take four days to clear. Each day the clinic typically receives $1,000 in checks, which take three days to clear. What is the clinics float?

Jumpdisk Company writes checks averaging $32,000 a day and it takes five days for these checks...

Jumpdisk Company writes checks averaging $32,000 a day and it takes five days for these checks to clear. The firm also receives checks in the amount of $35,000 per day, but the firm loses four days while its receipts are being deposited and cleared. What is the firm's net float in dollars?

Madison Corner writes 26 checks a day for an average amount of $481 each. These checks...

Madison Corner writes 26 checks a day for an average amount of $481 each. These checks generally clear the bank 3.75 days after they are written. In addition, the firm generally receives 63 checks with an average amount of $538 each. Deposited amounts are available after an average of 3.25 days. What is the amount of the firm's collection float? a)$12506 b)$33894 c) $63,258 d) $110156

Shannara Manufacturing writes 40 checks a day for an average amount of $537 each that generally...

Shannara Manufacturing writes 40 checks a day for an average amount of $537 each that generally clear 3.75 days after they are written. In addition, the firm generally receives 48 checks each day with an average amount of $622 each that are available after 3.25 days. Is this a collection or disbursement float? What is the amount of the float?

The A/P clerk of a company writes the checks for vendors, and the controller signs the...

The A/P clerk of a company writes the checks for vendors, and the controller signs the checks. The A/P clerk has devised a plan to give herself a raise. She creates a new vendor for her friend's business and creates two purchase orders for random car detailing services for $75 and $70. She writes the checks to pay these new vendors knowing the controller will only pay close attention to checks over $100. She delivers the checks to her friend...

Sal writes an average of 18 checks a month, and carries an average balance of $795...

Sal writes an average of 18 checks a month, and carries an average balance of $795 (although it has fallen below $750 during 3 months of the past year). She has $15,000 in a CD at the bank, and she adds $100 a month to her savings account, which now has $1,500. Her bank offers the types of accounts show below. Calculate the annual costs of the different plans and recommend the best for Sal. Regular checking, per-item plan: service...

Rosie writes an average of 18 checks a month, and carries an average balance of $795...

Rosie writes an average of 18 checks a month, and carries an average balance of $795 (although it has fallen below $750 during 3 months of the past year). She has $15,000 in a CD at the bank, and she adds $100 a month to her savings account, which now has $1,500. Her bank offers the types of accounts show below. Calculate the annual costs of the different plans and recommend the best for Nancy. Regular checking, per-item plan: service...

A copy machine is available 24 hours a day. On a typical day, the machine produces...

A copy machine is available 24 hours a day. On a typical day, the machine produces 88 jobs. Each job takes about 3 minutes on the machine, 2 minutes of which is processing time and 1 minute is setup time (logging in, defining the job). About 23 Percent of the jobs need to be reworked, in which case the setup time and the processing time have to be repeated. The remainder of the time, the equipment is idle. What is...

Suppose that hospitals charge by the day and that the typical hospital charges $1000 per day...

Suppose that hospitals charge by the day and that the typical hospital charges $1000 per day but some charge more and some charge less, and that insured consumers can choose any hospital. What do you think of this argument? “With respect to consumer incentives about use of hospital care there is no difference between a $100 per day copayment and 10 percent coinsurance.”

Subjects