Check clearing and the use of float

Float is dened 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: Sandberg Industries received a $100,000 check from one of its customers, deposited it into its bank account, and recorded it in its bank register. The funds were reected in Sandberg's bank account two days later. what type of float does this scenario describe? 0 Net oat O Collection oat O Disbursement oat Next, consider the case of Windsor Flooring Company: The management at Windsor Flooring has determined that it takes an average of eight days for checks the company writes to clear its bank account. Cash receipts from customers are reected in Windsor's bank account an average of four days after the checks are received. On an average day, Windsor writes checks that total $30,000, and it receives checks from customers that total $40,000. Compute the collection oat, the disbursement oat, and the net oat in dollars in the following table. (Note: By denition, collection oat is always considered negative, and disbursement oat is always positive. Both should be shown as positive numbers here. The net oat, 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