Problem:
A company has the following cash balance:
Company's ledger balance = $600,000
Bank's ledger balance = $625,000
Available balance = $550,000
Q1. Calculate the payment float and availability float
Q2. Why does the company gain from the payment float?
Q3. Suppose the company adopts a policy of writing checks on a remote bank. How is this likely to affect the three measures of cash balance?