4. Check clearing and the use of float Aa Aa E Float is defined as...
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4. Check clearing and the use of float Aa Aa E 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 Destin Co. is reconciling the company's bank statement. The reconciling item for outstanding checks is $30,000. What type of float does this scenario describe? O Net float O Collection float O Disbursement float Next, consider the case of Washburn Flooring Company: The management at Washburn Flooring has determined that it takes an average of six days for checks the company writes to clear its bank account. Cash receipts from customers are reflected in Washburn's bank account an average of four days after the checks are received. On an average day, Washburn writes checks that total $30,000, and it receives checks from customers that total $40,000
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