Question

Modos Company has deposited $4,120 in checks received from customers. It has written $1,590 in checks to its suppliers. The initial bank and book balance was $430. If $3,470 of its customers' checks have cleared, but only $430 of its own, calculate its float.

Multiple Choice

• $610

• $510

• $1,080

• $660

Answer 1

Bank balance = initial bank balance + checks cleared of customers - checks cleared issued to suppliers

Bank balance = $430 + $3,470 - $430 = $3,470

Book balance = initial book balance + checks received from customers - checks issued to suppliers

Book balance = $430 + $4,120 - $1,590 = $2,960

Float = bank balance - book balance = $3,470 - $2,960 = $510

So its float is $510.