Assume that each day a company writes and receives checks totaling $10,000. If it takes five days for the checks to clear and be deducted from the company's account, and only four days for the deposits to clear, what is the float?
Choice "A" is correct. $10,000. Float is the difference between the balance of checks outstanding, which have not cleared the bank and deposits made but which have not yet cleared the bank here.
$10,000/day checks drawn but not cleared × 5 days =
$ 50,000
Less $10,000/day checks received but not cleared × 4 days =
(40,000)
Positive "float"
$ 10,000
Choices "d", "b", and "c" are incorrect, per the above calculation.
