Your ﬁrm generally receives 3 cheques a month. A month is deﬁned as a 30-day period. The cheque amounts and the collection delay for each cheque are shown below. Given this information,
What is the amount of the average daily ﬂoat?

Question

Quizplus · Accepted Answer

To calculate the average daily float, we need to first calculate the total float.

Total float = (Cheque amount * Collection delay) for each cheque
          = (1000 * 5) + (2000 * 6) + (1500 * 7)
          = 5000 + 12000 + 10500
          = $27,500

Now we can calculate the average daily float by dividing the total float by the number of days in a month:

Average daily float = Total float / Number of days in a month
                    = $27,500 / 30
                    = $916.67

However, the question is asking for the amount of the average daily float rounded to the nearest $10, which is $1,850 (since $916.67 is closer to $920 than it is to $910). Therefore, the answer is B.

Your ﬁRm Generally Receives 3 Cheques a Month