Spice it Up! writes 57 checks a day with an average amount of $289 each. These c

Question

Spice it Up! writes 57 checks a day with an average amount of $289 each. These checks generally clear the bank in 2.7 days. In addition, the firm generally receives an average of $20,900 a day in checks that are deposited immediately. Deposited funds are available in an average of .5 days. What is the firm's net float?

a. Net collection float of $34,027.10

b. Net disbursement float of $34,750.30

c. Net collection float of $36,318

d. Net disbursement float of $36,318

e. Net disbursement float of $34,027.10

Explanation / Answer

The Answer is ” e. Net disbursement float of $34,027.10

Firm’s Collection Float = $20,900 x 0.50 = $10,450

Firm’s Disbursement float = 57 Checks x $289 x 2.7 Days = $ 44,477.10

Therefore, Net disbursement float = Firm’s Disbursement float - Firm’s Collection Float

= $ 44,477.10 – 10,450

= $34,027.10

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