transactions clear the bank. Consider the following scenario The accountant at D
ID: 2795028 • Letter: T
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transactions clear the bank. Consider the following scenario The accountant at Destin Hone Goads prints checks on Thursdays and mails the checks the same day. If the checks are mailed on Friday, this causes a one-day delay What type of float does this scenario describe? Callectlon float O Disbursement float O Net float Next, consider the case of Washburn Faoring Company The management at Washburn Flaoring has determined that it takes an average of four days for checks the company writes to clear its bank account. Cash reczipts from customers are reflected in Washburn's bank account an average of two days after the checks are received·0n an average day. Washbum writes chocks th t total $10,000, and it receives checks from custormers that total $20,000 Compute the collection float, the disbursement float, and the net float in dollars in the following table. (Note: By definition, colection float is always considered negative, and disbursement float is always ponitive. Bath should be shown as positve numbers here. The net float, however, should be shown as ponitive if it is favorable and as negative if it is unfavorable.) Washburn Flooring Company Float Caiculations Callection float Net float Gilven this information, you can deduce that on an average day, Washburn Flooring's bank balance is its book balance less than greater than the same asExplanation / Answer
1) Disbursement float since the company is making a delay in disbursing the cash.
2) collection float = 4*10000 = 40,000
Disbursement float = 2*20000 = 40000
So, net float = 40000-40000 = 0
Since net float is zero, the company's bank balance is same as book balance.
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