Assume that each day company writes and receives checks totaling $10,000. If it takes 5 days for the checks to clear and be deducted from the…

The float period is the time between when a check is written and when it clears the payer’s checking

account. Check float results in an interest-free loan to the pay or because of the delay between

payment by check and its deduction from the bank account. If checks written require one more day

to clear than checks received, the net float equals one dais receipts. The company will have free use

of the money for one day. In this case, the amount is $10,000.