Question

At the beginning of the day, a company had a ledger balance and available balance of...

At the beginning of the day, a company had a ledger balance and available balance of $3,860. During the day, the company wrote three checks for $355, $720, and $980. The company also deposited checks for $555 and $935. What is the company's collection float?

Multiple Choice

  • $565

  • $1,490

  • $2,055

  • $2,370

  • $3,545

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Homework Answers

Answer #1

Float is the difference between the firm's cash and bank records which is caused because of non clearing of cheques. Two types of floats exist: Positive and Negative.

Collection Float is a negative float and is associated with bills receivable. In the given question the company deposits two cheques worth $555 and $935. Therefore, collection float is on account of these cheques. This is also called clearing float and is a sub-part of collection float.

Therefore, Collection Float= $555+$935= $1,490

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