I need help with number 2 Please. Thanks Calculating Float [LO1] In a typical mo

Question

I need help with number 2 Please. Thanks

Calculating Float [LO1] In a typical month, the Murray Corporation receives 80 checks totaling dollar124,000. These are delayed four days on average. What is the average daily float? Assume 30 days in a month. Calculating Net Float [L01 ] Each business day, on average, a company writes checks totaling dollar 16,000 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 $21,000. The cash from the payments is available to the firm after two days. Calculate the company's disbursement float, collection float, and net float. How would your answer to part (a) change if the collected funds were available in one day instead of two? Costs of Float Purple Feet Wine, Inc., receives an average of dollar19,000 in checks per day. The delay in clearing is typically three days. The current interest rate is.017 percent per day. What is the company's float?

Explanation / Answer

a. Disbursement Float = 16,000 x 4 = 64,000

Collection Float = -21,000 x 2 = -42,000

Net Float(DF-CF) = 64,000-42,000 = $ 22,000

b.  Disbursement Float = 64,000

Collection Float =-21,000

Net Float(DF-CF) = 64,000-21,000= $ 43,000

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