2. Cheque clearing and the use of float Aa Aa 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. Consider the following scenario: The accountant for Graham 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? Collection float O Net float Disbursement float Now consider this scenario: Now consider this scenario: The management at Herman Flooring Co. determined that it takes an average of eight days for cheques the company writes to clear its bank account. Cash receipts from customers are reflected in Herman's bank account an average of two days after the cheques are received. On an average day, Herman writes cheques that total $30,000, and it receives cheques from customers that total $40,000 Compute the collection float, the disbursement float, and the net float in dollars in the following table. (Hint: 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 favourable and as negative if it is unfavourable.) Herman Flooring Co Float Calculations Collection float $320,000 $80,000 $240,000 $60,000 Disbursement float Net float Given this information, you can deduce that on an average day, Herman Flooring Co.'s bank balance is its book balance. Now consider this scenario: The management at Herman Flooring Co. determined that it takes an average of eight days for cheques the company writes to clear its bank account. Cash receipts from customers are reflected in Herman's bank account an average of two days after the cheques are received. On an average day, Herman writes cheques that total $30,000, and it receives cheques from customers that total $40,000. Compute the collection float, the disbursement float, and the net float in dollars in the following table. (Hint: 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 favourable and as negative if it is unfavourable.) Herman Flooring Co. Float Calculations Collection float Disbursement float $240,000 Net float $320,000 $80,000 $60,000's bank balance is Given this information, you can deduce that on an average day, Herm its book balance. Now consider this scenario: The management at Herman Flooring Co. determined that it takes an average of eight days for cheques the company writes to clear its bank account. Cash receipts from customers are reflected in Herman's bank account an average of two days after the cheques are received. On an average day, Herman writes cheques that total $30,000, and it receives cheques from customers that total $40,000. Compute the collection float, the disbursement float, and the net float in dollars in the following table. (Hint: 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 favourable and as negative if it is unfavourable.) Herman Flooring Co. Float Calculations Collection float Disbursement float Net float $320,000 $160,000 $160,000 Given this information, you can deduce that on an average day, Herm bank balance is its book balance. Compute the collection float, the disbursement float, and the net float in dollars in the following table. (Hint: 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 favourable and as negative if it is unfavourable.) Herman Flooring Co. Float Calculations Collection float Disbursement float Net float Given this information, you can deduce that on an average day, Herman Flooring Co.'s bank balance is its book balance. less than greater than the same as