A ﬁrm has $18,020 in outstanding cheques that have not cleared the bank. The ﬁrm also has $23,500 in deposits that have been recorded by the ﬁrm but not by the bank. The current available
Balance is $2,640. What is the status of the net ﬂoat?

Question

Quizplus · Accepted Answer

The net float is calculated as the difference between the amount of outstanding cheques and the amount of unrecorded deposits. 
Net float = Outstanding cheques - Unrecorded deposits 
Net float = $18,020 - $23,500 = -$5,480 
Since the net float is negative, it means that the available balance is less than the true or book balance, and the company has written cheques for more money than it currently has in the bank. 
Therefore, the net collection float is $5,480, which means that the company needs to wait for the outstanding cheques to clear the bank before it can use these funds.

A ﬁRm Has $18,020 in Outstanding Cheques That Have Not