Jumpdisk Company writes checks averaging $15,000 a day, and it takes 5 days for these checks to clear. The firm also receives checks in the amount of $17,000 per day, but the firm loses three days while its receipts are being deposited and cleared. What is the firm's net float in dollars?
A) $126,000
B) $ 75,000
C) $ 32,000
D) $ 24,000
E) $ 16,000

Question

Quizplus · Accepted Answer

To calculate the firm's net float, we must first find the gross float, which is the total amount of checks written and received before they are cleared.

For checks issued: 
average daily checks = $15,000 
clearing time = 5 days 
gross float for checks issued = $15,000 x 5 = $75,000

For checks received: 
average daily checks = $17,000 
clearing time = 3 days 
gross float for checks received = $17,000 x 3 = $51,000

Now we can calculate the net float by subtracting the time it takes for checks to clear from the total gross float:

net float = gross float for checks issued - gross float for checks received 
net float = $75,000 - $51,000 
net float = $24,000

Therefore, the firm's net float is $24,000.

Jumpdisk Company Writes Checks Averaging $15,000 a Day, and It