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Next, consider the case of Windsor Flooring Company: The management at Windsor Flooring has determined that it takes an average of 8 days for checks the company writes to clear its bank account. Cash receipts from customers are reflected in Windsor's bank account an average of 2 days after the checks are received. On an average day, Windsor writes checks that total $10,000, and it receives checks from customers that total $20,000. Compute the collection float, the disbursement float, and the net float in dollars in the following table. (Note: By definition, collection float is always considered negative, and disbursement float is always positive. Both should be shown as positive numbers here. The net float, however, should be shown as positive if it is favorable and as negative if it is unfavorable.) Windsor Flooring Company Float Calculations Collection float Disbursement float

Next, consider the case of Windsor Flooring Company: The management at Windsor Flooring has determined that it takes an average of 8 days for checks the company writes to clear its bank account. Cash receipts from customers are reflected in Windsor's bank account an average of 2 days after the checks are received. On an average day, Windsor writes checks that total $10,000, and it receives checks from customers that total $20,000. Compute the collection float, the disbursement float, and the net float in dollars in the following table. (Note: By definition, collection float is always considered negative, and disbursement float is always positive. Both should be shown as positive numbers here. The net float, however, should be shown as positive if it is favorable and as negative if it is unfavorable.) Windsor Flooring Company Float Calculations Collection float Disbursement float

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter17: The Management Of Cash And Marketable Securities
Section: Chapter Questions
Problem 8P
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Next, consider the case of Windsor Flooring Company: The management at Windsor Flooring has determined that it takes an average of 8 days for checks the company writes to clear its bank account. Cash receipts from customers are reflected in Windsor's bank account an average of 2 days after the checks are received. On an average day, Windsor writes checks that total $10,000, and it receives checks from customers that total $20,000. Compute the collection float, the disbursement float, and the net float in dollars in the following table. (Note: By definition, collection float is always considered negative, and disbursement float is always positive. Both should be shown as positive numbers here. The net float, however, should be shown as positive if it is favorable and as negative if it is unfavorable.) Windsor Flooring Company Float Calculations Collection float Disbursement float Net float Given this information, you can deduce that on an average day, Windsor Flooring's bank balance is its book balance.
Transcribed Image Text:Next, consider the case of Windsor Flooring Company: The management at Windsor Flooring has determined that it takes an average of 8 days for checks the company writes to clear its bank account. Cash receipts from customers are reflected in Windsor's bank account an average of 2 days after the checks are received. On an average day, Windsor writes checks that total $10,000, and it receives checks from customers that total $20,000. Compute the collection float, the disbursement float, and the net float in dollars in the following table. (Note: By definition, collection float is always considered negative, and disbursement float is always positive. Both should be shown as positive numbers here. The net float, however, should be shown as positive if it is favorable and as negative if it is unfavorable.) Windsor Flooring Company Float Calculations Collection float Disbursement float Net float Given this information, you can deduce that on an average day, Windsor Flooring's bank balance is its book balance.
6. Check clearing and the use of float Float is defined as the difference between the balance shown on the books and the balance in the bank account. A lag often occurs between the time receipts and disbursements are recorded on the company's books and when the transactions clear the bank. The accountant for Sandberg Window and Glass Co. has determined that it takes, on average, four days from the date payments are mailed to when they clear the company's account. What type of float does this scenario describe? Net float Collection float Disbursement float
Transcribed Image Text:6. Check clearing and the use of float Float is defined as the difference between the balance shown on the books and the balance in the bank account. A lag often occurs between the time receipts and disbursements are recorded on the company's books and when the transactions clear the bank. The accountant for Sandberg Window and Glass Co. has determined that it takes, on average, four days from the date payments are mailed to when they clear the company's account. What type of float does this scenario describe? Net float Collection float Disbursement float
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