Answer to Chapter Review and Self Test Problem

20.1 The disbursement float is 7 days X $3,000 = $21,000. The collection float is 2days X (-$1,700) = -$3,400. The net float is $21,000 + (-3,400) = $17,600. In other words, at any given time, the firm typically has uncashed checks outstanding of $21,000. At the same time, it has uncollected receipts of $3,400. Thus, the firm's book balance is typically $17,600 less than its available balance, for a positive $17,600 net float.

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