On any given day, a firm receives numerous checks worth an average combined total of $5,900. The funds from the deposited checks are generally available after 1.5 days. Every day, the firm mails out checks totaling $4,400 that generally take 3 days to clear the bank. What is the amount of the collection float?

Question

Quizplus · Accepted Answer

The collection float can be calculated as follows:

Average daily receipts: $5,900 
Time to clear: 1.5 days

Average daily disbursement: $4,400 
Time to clear: 3 days

Collection float = (Average daily receipts x Time to clear) - (Average daily disbursement x Time to clear) 
Collection float = (5,900 x 1.5) - (4,400 x 3) = 8,850

Therefore, the amount of the collection float is $8,850 (Option C).

On Any Given Day, a Firm Receives Numerous Checks Worth