Question

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 average day, Plyler Enterprises writes 42 checks with an average amount of $587. These checks clear the bank in an average of 2 days. What is the average amount of the disbursement float?

18. On average, your firm receives 62 checks a day from customers. These checks, on average, are worth $39.90 each and clear the bank in 2.5 days. In addition, your firm disburses 38 checks a day with an average amount of $89.50. These checks clear your bank in 2 days. What is the normal amount of collection float?

19. A firm has $16,718 in outstanding checks that have not cleared the bank. The firm also has $13,250 in deposits that have been recorded by the firm but not by the bank. The current available balance is $8,407. What is the status of the net float?

20. You have determined that your average collection time is 6.1 days. It takes your firm 4.5 days to prepare and mail out all the monthly statements to your customers who all pay promptly upon receipt. On average, the mail time between your firm and your customers is 2.4 days, and customer checks take an average of 1.8 days to clear the bank. How long, on average, is it taking your firm to process the payments from customers?

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Answer 1

As per policy, one question or four parts of a question are allowed to answer at a time, so answering4:

16)
Cash balance at the end = 10600+12500-12330-750-1000-1525=7495
17)
Total checks issued = 587 * 42 = $24654
average amount of disbursement float = 24654 / 2 = 12327
18)
Normal amount of collection float = 62 * 39.90 = 2473.80
19)
Net float = collection float - disbursement float = 13250 - 16718 = -3468