Brewster's Writes 145 Checks a Day for an Average Amount

question 111

Multiple Choice

Brewster's writes 145 checks a day for an average amount of $211 each. These checks generally clear the bank 3.5 days after they are written. In addition, the firm generally receives an average of $48,700 a day in checks. The checks that are received are deposited immediately and the funds are generally available the following day. What is the amount of the firm's disbursement float?

• A) $104,625.00
• B) $107,082.50
• C) $155,255.50
• D) $170,450.00
• E) $48,700.00

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Definitions:

Depreciation Expense

The allocation of an asset's cost over its useful life, reflecting the decrease in value over time due to wear and tear or obsolescence.

Accounts Receivable

Money owed by customers to a company for goods or services that have been delivered but not yet paid for.

Inventory Turnover

A financial metric measuring the rate at which a company sells and replaces its stock of goods during a given period.

Cost of Goods Sold

Represents the direct costs attributable to the production of goods sold by a company, including materials and labor.