Question

ABC Company writes 315 checks a day for an average amount of $1361 each. These checks...

ABC Company writes 315 checks a day for an average amount of $1361 each. These checks generally clear the bank in 4 days. In addition, the firm generally receives an average of $16617 a day in checks that are deposited immediately. Deposited funds are available in 1 days. What is the firm's collection float?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Cash float is divided into two types : Disbursement float and collection float.

Disbursement float starts when company writes check to other company. At that point available balance in bank account does not

decrease, but book balance decrease.

Collection float start when company receives check, records check and deposited in bank but not credited in bank account.

It means available balance in bank account has not increased, but book balance has increased.
Firm receives an average of $16617 a day in checks and deposit immediately which clears in 1 day.
It means $ 16617 amount has been increased in Book Balance, But available balance in bank account has not been increased.
So, firm's collection float is $16617.
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
ABC Company writes 338 checks a day for an average amount of $428 each. These checks...
ABC Company writes 338 checks a day for an average amount of $428 each. These checks generally clear the bank in 5 days. In addition, the firm generally receives an average of $134314 a day in checks that are deposited immediately. Deposited funds are available in 1 days. What is the firm's net float?
ABC Company writes 23 checks a day for an average amount of $912 each. These checks...
ABC Company writes 23 checks a day for an average amount of $912 each. These checks generally clear the bank in 3days. In addition, the firm generally receives an average of $6327 a day in checks that are deposited immediately.Deposited funds are available in 2 days. What is the firm's net float?
Each business day, on average, a company writes checks totaling $800 to pay its suppliers. The...
Each business day, on average, a company writes checks totaling $800 to pay its suppliers. The usual clearing time for the checks is 4 days. Meanwhile, the company is receiving payments from its customers each day, in the form of checks, totaling $960. The cash from the payments is available to the firm after 1 day. Calculate the company's disbursement float, collection float, and net float. Disbursement float: $ ____________. Collection float: $ ____________, Net float: $ ____________. If the...
Each business day, on average, a company writes checks totaling $12,900 to pay its suppliers. The...
Each business day, on average, a company writes checks totaling $12,900 to pay its suppliers. The usual clearing time for the checks is four days. Meanwhile, the company is receiving payments from its customers each day, in the form of checks, totaling $23,900. The cash from the payments is available to the firm after two days. a. Calculate the company’s disbursement float, collection float, and net float. (A negative answer should be indicated by a minus sign.)      b. If...
8. Each business day, on average, a company writes checks totaling $32,500 to pay its suppliers....
8. Each business day, on average, a company writes checks totaling $32,500 to pay its suppliers. The usual clearing time for the checks is five days. Meanwhile, the company is receiving payments from its customers each day, in the form of checks, totaling $43,500. The cash from the payments is available to the firm after three days. a. Calculate the company’s disbursement float, collection float, and net float. (A negative answer should be indicated by a minus sign. Do not...
On a typical day, a company writes 68 checks worth a total of $9,485 that clear...
On a typical day, a company writes 68 checks worth a total of $9,485 that clear in 2.75 days. The company also collects 80 checks worth a total of $10,940 that clear in 2.25 days. Is this a collection or disbursement float? What is the amount of the float? Multiple Choice A collection float of $1,626 A collection float of $1,469 A collection float of $1,455 A disbursement float of $1,455 A disbursement float of $1,469
WEEK 6 HW CORP FIN 4 SHOW YOUR CALCULATIONS (B) 16. As of the beginning of...
WEEK 6 HW CORP FIN 4 SHOW YOUR CALCULATIONS (B) 16. As of the beginning of the quarter, O’Neill’s Pub Supplies had a cash balance of $10,660. During the quarter, the company collected $12,500 from customers and paid suppliers $12,330. The company also paid an interest payment of $750 and an income tax payment of $1,000. In addition, the company repaid $1,525 on its long-term debt. What is O’Neill’s cash balance at the end of the quarter? 17. On an...
7. Check clearing and the use of float Float is defined as the difference between the...
7. Check clearing and the use of float Float is defined as the difference between the balance shown on the books and the balance in the bank account. A lag often occurs between the time receipts and disbursements are recorded on the company’s books and when the transactions clear the bank. Consider the following scenario: Destin Industries received a $20,000 check from one of its customers, deposited it into its bank account, and recorded it in its bank register. The...
The Baker Co. receives an average of 230 checks a day. The average amount per check...
The Baker Co. receives an average of 230 checks a day. The average amount per check is $1,150. The firm is considering a lockbox system which it anticipates will reduce the average collection time by 3 days. The bank charges $.25 a check for this service. The daily interest rate on Treasury bills is .008 percent. What is the amount of the expected daily savings of the lockbox system? What is the average daily cost of the lockbox system? (SHOW...
Check clearing and the use of float Float is defined as the difference between the balance...
Check clearing and the use of float Float is defined as the difference between the balance shown on the books and the balance in the bank account. A lag often occurs between the time receipts and disbursements are recorded on the company’s books and when the transactions clear the bank. Consider the following scenario: The difference between the balance shown on Destin Co.’s books and the balance shown on its bank statement is $40,000. What type of float does this...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT